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UNIVERSITY  OF  CALIFORNIA 
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Cyclopedia  of  Building, 
Loan  and  Savings  Associations 


HOW  TO  ORGANIZE 

AND 

SUCCESSFULLY  CONDUCT  THEM 


EMBRACING 

Tlie  Origin  and  History  of  Co-operative  Societies;  Object!  and  Benefits  of  Building 
Associations;  How  to  Organize  and  Successfully  Conduct  Them;  Leagues; 
Legislation;   Constitution  and  By-Laws;    Forms  and  Description  of 
Books,  Blanks,  and  Papers;    Interest  and  Dividend  Tables; 
Auditing  and  Supervision;  and  a  Comprehensive  Va- 
riety of  Practical  and  Useful  Information  and 
Suggestions,  with  Special  Features 
Relative  to  Advertising. 


BY 

Henry  S.  Rosenthal 


Fourth  Edition.     ReciseJ  and  Enlarged. 


1020. 

.^MtmcAN    BiriLDiHc  Association    New.s  Co., 

Cincinnati — Chicago. 


'4  *J  '} 


3 


Copyright  1930 

By 

Hemrv  S.  Rosenthal. 


a.  at 

\9Z.O 


Preface  to  Fourth  Edition. 

THE  nine  years  that  have  elapsed  since  the  pubHca- 
tion  of  the  Third  Edition  of  this  book,  and  especial- 
ly the  last  half  of  that  period,  have  witnessed  changes 
greater  and  more  important  than  those  in  any  half-century 
of  the  Christian  era.  It  has  witnessed  the  beginning, 
progress  and  close  of  the  greatest  war  known  to  history. 

In  the  shock  of  this  mad  conflict,  the  entire  structure 
of  civilization  has  been  shaken  to  its  very  foundations. 
Since  the  termination  of  hostilities  the  human  race  has 
had  barely  time  to  catch  its  breath  and  make  a  dazed 
survey  of  the  ruin  and  destruction  that  war  has  wrought; 
and  to  form  a  growing  conception  of  the  changes  which 
these  recent  years  have  brought  to  all  lines  of  human 
activity.  Civilization  today  is  facing  problems  that  were 
undreamerl  of  five  years  ago.  Commerce  and  industry, 
capital  and  labor,  manufacturing  and  mining,  agriculture, 
and  transjjortation  are  all  confronted  by  issues  of  vital 
importance.  They  can  be  solved  only  by  the  application 
of  the  highest  wisdom  and  most  earnest  efforts  of  men 
and  women  everywhere. 

One  of  the  most  deep-going  questions  that  America 
must  consider  today  grows  out  of  the  increasing  needs 
and  the  more  and  more  strenuous  demands  for  additional 
homes.  The  ultimate  unit  of  which  our  whole  system 
of  government  is  composed  is  the  family,  and  the  family 
kingdom  is  the  home.  One  of  the  seriously  disturbing 
factors  which  have  attracted  the  attention  of  thoughtful 
Americans  for  some  years  past  is  the  growing  ratio  of 
our  population  who  liave  no  homes  of  their  own,  but  who 


PREFACE. 

live  in  rented  houses.  .\  rented  liouse  or  apartment  can 
never  be  a  real  home  in  the  highest  and  truest  sense  of 
the  word. 

A  nation  composed  of  renting  tenants  always  lacks  the 
highest  type  of  patriotism.  This  enlarged  ratio  of  tenant 
citizenry  is  not  merely  a  social  and  economic  evil,  to  be 
lightly  regretted  and  then  dismissed  and  forgotten.  It  is 
a  real,  vital  danger,  insidiously  undermining  the  founda- 
tions of  our  Government  and  threatening  the  very  life 
of  the  nation!  There  is  at  this  time  a  serious  housing 
shortage  in  this  country.  This  condition  is  not  merely 
local,  affecting  a  few  communities.  It  is  nation-wide,  and 
exists  in  practically  every  community  in  America.  This 
housing  shortage  is  not  a  new  thing,  however,  arising 
wholly  by  reason  of  the  war.  The  war  simply  aggravated 
a  widespread,  and  rapidly  growing  trouble  of  peace  times, 
and  which  the  country  must  now  deal  with.  The  growth 
of  tenantry  is  not  confined  to  the  towns  and  cities  of 
America,  but  the  same  conditions  may  be  observed  in 
rural  and  agricultural  communities.  The  increase  in  the 
ratio  of  farms  operated  by  tenants  is  growing  apace  in 
every  state  of  the  nation. 

In  all  efYorts  to  solve  this  problem  of  tenantry  and  aid 
city  and  farm  tenants  to  become  home  and  farm  owners, 
the  financial  factor  is  always  the  one  most  difficult  to 
solve.  But  a  solution  must  be  found  if  our  Government 
is  long  to  endure. 

Thoughtful  students  of  these  questions  are  fast  coming 
to  realize  that  in  the  building  association  system  of  Amer- 
ica zuill  be  found  the  most  potent  and  efficient  instrument 
to  aid  in  solving  this  vital  problem.  The  public  is  com- 
ing more  and  more  to  appreciate  that  in  this  system  is 
found  the  only  type  of  financial  institution  known  to  the 
economic  life  of  our  country  which  confines  its  activities 

[ivj 


PREFACE. 

and  devotes  all  its  resources  to  the  great  object  of  teach- 
ing thrift  and  aiding  families  to  build  homes. 

This  housing  problem,  to  be  sure,  is  not  confined  to 
America,  It  is  present  in  still  more  aggravated  form  in 
nearly  every  civilized  country.  In  many  other  nations 
the  governments  are  dealing  with  the  problem  in  charac- 
teristic fashion.  They  are  extending  government  sub- 
sidies and  expending  government  funds  to  finance  the 
building  of  homes  which  are  sold  to  the  citizen  on  long- 
time contracts  by  the  government  itself.  This  plan  of 
extending  government  aid  to  private  citizens  is  contrary 
to  the  genius  and  theory  of  our  Government.  The  ac- 
cepted idea  in  America  has  always  been  that  the  true  re- 
lation between  the  government  and  the  citizen  should  be 
one  in  which  the  able-bodied  citizen  supports  and  main- 
tains the  government,  rather  than  that  the  government 
should  support  and  maintain  the  able-bodied  citizen. 
America  has  such  an  abundance  of  wealth  and  such  in- 
exhaustible resources,  that  it  is  only  needful  for  proper 
channels  to  be  provided  whereby  the  solution  of  this 
great  problem  may  be  easily  attainable. 

How  to  solve  this  tenant  question  is  one  of  the  greatest 
issues  now  before  our  country.  It  is  the  one  great  line 
of  work  for  which  building  associations  exist.  The  last 
decade  has  witnessed  a  tremendous  growth  in  the  strength 
and  resources  of  these  institutions.  Their  ability  tn 
handle  and  solve  this  vital  problem,  assures  happy  relief. 
These  institutions  have  grown  in  number  and  in  re- 
sources until  the  American  building  associations  are  to- 
day the  largest  and  strongest  mutual  co-operative  system 
of  institutions  that  the  world  has  crcr  seen.  They  have 
been  evolved  from  the  needs  of  our  people.  Their  strength 
and  popularity  are  abundant  evidence  of  (he  fact  that  they 
have  accurately  measured  and  fitted  themselves  to  supply 
a  vital,  national  need.     Cireat  as  are  the  results  already 

Ivl 


PREFACE. 

accomplished,  it  is  easy  to  see  that  they  have  only 
scratched  the  surface  of  the  opportunities  which  await 
them. 

Plans  are  now  under  consideration  that  will  greatly 
strengthen  these  institutions  and  open  to  them  a  much 
wider  opportunity  for  service.  Among  these  is  the  sug- 
gestion that  building  associations  be  permitted  to  utilize 
the  mortgages  lying  in  their  vaults  as  a  basis  and  security 
on  which  to  issue  a  standard  type  of  bond,  the  entire 
proceedings  to  be  adeciuately  safeguarded.  It  is  believed 
that  this  will  provide  very  large  additional  resources 
which  building  associations  may  utilize  in  helping  to 
finance  additional  home  building,  and  thus  multiply  the 
useful  service  they  render  to  the  respective  communities 
where  they  operate. 

The  many  material  changes  and  improvements  that 
have  been  developed  in  building  association  plans  and 
methods  in  recent  years,  the  increasing  national  need  for 
the  special  services  rendered  by  these  associations,  and 
the  almost  limitless  opportunities  that  lie  before  them, 
may  be  regarded  adequate  reasons  for  the  appearance  at 
this  time  of  a  new  edition  of  this  work. 

The  author  desires  to  express  his  sincere  gratitude  to 
Mr.  K.  V.  Haymaker  who  has  rewritten  several  sections 
in  this  revised  volume  and  to  Dr.  Alfred  L.  Hall-Quest 
of  the  University  of  Cincinnati,  who  has  edited  the  entire 
manuscript  and  prepared  the  Index. 

The  Author. 

Cincinnati,  Ohio,  April  i,  ig20. 


[vi] 


TABLE  OF  CONTENTS. 


CHAPTER  I. 
Co-operation. 
Origins  of  Co-operating  Business;  Conditions  of  Successful 
Co-operation ;  Examples  of  Co-operative  Concerns  ;  Build- 
ing Associations  as  Co-operative  Institutions 1-8 

CHAPTER  n. 
Building  Associations. 
Name  and  Title ;  Definition ;  The  Aim  and  Purpose ;  Origin ; 
Essential  Features;  Saving  and  Lending;  The  Saving 
Feature  ;  Advantages  of  Membership  ;  Unlimited  Savings  ; 
The  Lending  Feature;  How  Borrowing  Helps  Saving; 
Periodicals  Devoted  to  Building  Associations;  Changes  of 
Management  Announced  in  The  News;  Recognition  by- 
Congress;    Statistical   Information 9-28 

CHAPTER  III. 
Historical  Review. 
Societies  in  England ;  The  Movement  in  Other  Foreign  Coun- 
tries;   Early    History   in    the    United    States;    The    First 
Building  Association   in  the  United   States 2fV-a4 

CHAPTER  IV. 
The  Results  Achieved  by  Building  Associations. 
Means  to  Financial  Advancement;  Methods  of  Operation; 
Helping  Men  to  Independence;  A  Man  is  King  in  His 
Own  Castle;  Home  Building  Made  Easy  and  Dignified; 
Home  Building  Will  Beautify  American  Life;  The  Fed- 
eral Reserve  Banking  System;  The  Future  of  the  Build- 
ing Association   Movement .?5^tt) 

CHAPTER  V. 
Building  Association  Leagues. 
Origin  of   Leagues;  Organization  of   State  Leagues;   Inter- 
national League;  County,  City  and  Local  Leagues;  What 
a  League  Can  Do:  League  Membership;  The  Press 47-68 


TABLE  OF  CONTENTS. 

CHAPTER  VI. 
Legislation  and  Taxation. 
Legislation  in  England ;  Provisions  of  the  English  Law ; 
Defects  in  the  English  Law;  Laws  in  the  United  States; 
Improved  Legrislation  ;  Litigation ;  Exemption  from  Taxa- 
tion ;  Forceful  Arguments  by  Hon.  Julius  Stern ;  The 
Association  is  a  Clearing  House  for  Its  Members; 
Summary  of  Revenue  Measures ;  Summary 59-81 

CHAPTER  VII. 
Plans  ok  Associations. 
The  Terminating  Plan ;  The  Permanent  Plan ;  The  Serial 
Plan;  Paying  Off  a  Matured  Series;  Advantages  of  the 
Serial  Plan ;  The  Pennanent  Plan ;  Paid-up  Stock ;  The 
Fundamental  Principles  of  Building  Associations;  Fines 
for  Delinquents;  Maturity  of  Shares;  Arguments  Favor- 
ing the  Permanent  Plan ;  Withdrawal  Rules ;  Reserve 
Fund;  Premiums;  The  Charging  of  Fees;  The  National 
Building  and  Loan  Associations;  Cancellation  of  Fees; 
Special  Deposits;  Permanent  or  Guaranteed  Stock;  Farm 
Loans  or  Rural  Credits 82-124 

CHAPTER  VIII. 
How  TO  Organize. 
Necessary  Conditions;  Preliminary  Steps;  Choice  of  Name; 
Capital  Stock;  The  Constitution;  By-laws;  Incorporation; 
Officers;  Headquarters;   Recruiting  Members;   Co-opera- 
tion with  Banks  Desired;  New  Regulations 12.5-143 

CHAPTER  IX. 
Stock  and  Stockholders. 
Increase  of  Stock;  Stock  is  Property;  Shares  Transferable; 
Stock   Payments  or  Dues;   Paid-up  Stock;   Other  Facts 
Concerning  Stock;  Certificates  of  Deposit 144-lSl 

CHAPTER  X. 
Definition  of  Stock  and  Stockholders. 
Difference   Defined ;    Serial   Associations ;    Borrowing   Mem- 
bers ;  Safety  of  These  Associations 152-156 

CHAPTER  XL 

I.NSURANCE. 

Insurance  Featiires;  Health,  Accident  and  Disability  Insur- 
ance ;  Tornado  Insurance  ;  Life  Insurance 157-159 

[viii] 


TABLE  OF  CONTENTS. 

CHAPTER  XII. 

Duties  and  Rights  of  Members. 

Membership ;  Duties  of  Members ;  Fines  and  Forfeitures ; 
Rig-hts  of  Members ;  Corporate  Rights  of  Members ; 
Rights  as  Investors ;  Dividends ;  Rights  of  Withdrawal ; 
Inheritance  Tax  Laws;  Rights  of  Borrowers;  Duties  of 
Borrowers  160-171 

CHAPTER  XIII. 
Loans  and  Securities. 

Premiums ;  Nature  of  a  Loan ;  Mortgages ;  Other  Securi- 
ties ;  Assignment  of  Stock ;  Sale  of  Securities ;  Disposition 
of  Proceeds;  Loans  and  Securities;  Application  for  Loan; 
The  Necessity  of  a  Plat ;  Appraisement  of  Real  Estate ; 
Expert  Appraisers;  Mechanics'  Liens;  Straight  Mortgage 
Loans ;   State  Supervision 172-187 

CHAPTER  XIV. 
Corporate  Management. 

The  Corporate  Meeting;  General  Meetings;  Special  Meet- 
ings ;  Management  of  Corporate  Meetings ;  Officers :  Their 
Election  and   General  Powers 188-193 

CHAPTER  XV. 

El-ECTION    AND    DUTIES   OF    OFFICERS. 

Officers  Required ;  Elections ;  Duties  of  President  and  Vice- 
President;  Duties  of  Secretary;  Assistant  Secretaries; 
Duties  of  Treasurer;  General  Manager;  Duties  of  Direc- 
tors; EKities  of  Trustees;  The  Attorney:  His  Appoint- 
ment, Duties  and  Compensation;  Bonds  of  Officers; 
Surety  Bonds;  Responsibility  of  Officers;  Ranunera.tion 
of  Officers;  Salar>-  of  Directors;  Salary  of  Secretary.  ...  194-213 

CHAPTER  XVI. 

PowFjJs  AND  Liabilities. 

General  J'owers;  Perpetual  Successions;  Tlie  ("orporate 
Seal;  C^ontracts  and  Agents;  5yuits;  Rules;  Special 
Powers  ;    DissoUition 244-220 

lixl 


TABLE  OF  CONTENTS. 

CHAPTER  XVII. 

Practical  Qukstions  Answered. 

Borrowinjr  Money ;  Cost  of  a  Loan ;  Time  Reiiuircd  to  Pay 
Up  a  Ix>an ;  Advantages  of  a  Buildinp  Association  Loan; 
Contingent  or  Reserve  Fund;  Undivided  Profits;  Quick 
Assets;  Mortgages — Custody,  Recording;  Insurance  Poli- 
cies as  Collateral  Security;  Leaseholds;  Taxes  and  Assess- 
ments; Payinent  of  Dividends;  Ehies;  Deposit  Slips; 
Business  Methods  in  Large  Associations;  Disbursements; 
Paid-up  Stock  Ledger ;  Semi-annual  Settlements  in  Per- 
manent Associations;  General  Remarks;  Paying  Off 
Sliares  220-241 

CHAPTER  XVIII. 

Auditing  :    Its  Necessity  and  Object. 

State  Examinations;  Purposes  of  Auditing;  Protection  of 
Corporate  Interests ;  Protection  of  Members ;  Statutory 
and  Constitutional  Requirements ;  Economical,  Labor- 
saving,  and  Simple  Methods ;  The  Balance  Sheets ;  The 
Auditor  the  Representative  of  the  Members;  The  Selec- 
tion of  the  Auditing  Committee ;  Qualifications  for 
Auditing;  Disqualification  of  Auditors;  Assistance  from 
Officials;  Change  of  Auditors;  Conxpensation  of  Auditors. 243-259 

CHAPTER  XIX. 

Auditing:    Its  Methods. 

Uniformity  Impossible;  Care  of  Books;  Special  Hints;  False 
Accounts;  Errors  of  Omission;  General  Outline;  Share 
Contributions  ;  Proving  a  Cash  Balance  ;  Secretary's  Con- 
tribution Book;  Monthly  Secretary's  Book;  Secretary's 
Casii  Book;  Treasurer's  Cash  Book;  Members'  Ledger; 
Withdrawals;  General  Ledger;  Assets  and  Liabilities; 
Auditor's  Report  on  Special  Matters;  Auditor's  Certifi- 
cate ;  Safety  Insured 260-281 

CHAPTER  XX. 
Reports. 

Their  Necessity;  Legal  Requirements;  Preparation  and  Pub- 
lication of  Reports ;  Secretary's  Balance  Sheets ;  Specimen 
Reports   Illustrated 28^-290 

[x] 


TABLE  OF  CONTENTS. 

CHAPTER  XXI. 
Rebate  and  Compound  Interest  Tables .• 291-521 

CHAPTER  XXII. 
Distribution   of  Earnings — Permanent   Plan. 
Calculations    of    Dividends    and     Interest ;     Application    of 

Profits  ;  Permanent  Plan  Tables 322-370 

CHAPTER  XXIII. 
Distribution  of  Earnings. 
Serial  Plan ;  Division  of  Profits ;  Rules  and  Tables  Exempli- 
fying the  Division  of  Profits  Under  Dexter's  Rule  and  the 
Partnership    Rule 371-391 

CHAPTER  XXIV. 
Legal  Forms  for  Associations. 
Specimen  Blanks;  Articles  of  Corporation  (Ohio);  Sub- 
scription List;  Bonds  of  Officers  (Ohio);  Mortgage 
(Ohio);  Mortgage  Clause  for  Insurance  Policies;  Mort- 
gage Collateral  Note  on  Shares  of  Stock;  Waiver  of 
Mechanics'  Lien  (Ohio)  ;  Cx>llateral  Note  for  Loan  on 
Pass-Book;  Attorney's  Report 392-404 

CHAPTER  XXV. 

Books  a.nd  Blanks. 
General  Suggestions;  Book  Accounts;  Pass-Bpoks;  Deposit 
Envelopes  and  Slips ;  Necessary  Books  and  Forms ;  BuiW- 
ing  Association   .'Supplies 405-415 

CHAPTER  XXVI. 
Juvenile   Savings 416-423 

CHAPTER  XXVII. 

Advertising. 
Why    Should    You    Advertise? — How    ShouW    You    Adver- 
tise?— Th<-     Preparation    of    Advertisements;    Technical 
Data    424-434 

APPENDIX. 

(Zonstitutjon  ;  By-l^ws  ;  I^ws  of  Ohio 435-479 

Bibliocraphv  480-492 

Index    493-500 

Ixil 


CHAPTER  I. 

Co-operation. 

The  first  record  of  human  co-operation  is  stated  in  the 
well  known  words  of  the  story  in  Genesis:  it  is  not  good 
for  man  to  live  alone.  While  this  has  particular  reference 
to  marriag-e  it  voices  the  basic  principle  of  progress  in 
all  fields  of  himian  enterprise.  Co-operation  is  the  watch 
word  of  social  achievement.  Man  has  been  called  a  social 
animal.  In  fact,  he  resembles  the  bees  and  ants  and 
beavers  in  his  application  of  the  laws  governing  co-opera- 
tion. Without  co-operation  business  would  be  impossi- 
ble, governments  unknown,  cities  unheard  of.  Civiliza- 
tion is  nothing  more  than  co-operation  of  the  most  intel- 
ligent and  sympathetic  kind. 

It  may  be  said  that  co-operation  is  instinctive.  Its 
origin  lies  in  the  nature  of  life  itself.  Just  as  the  many 
members  of  our  bodies  work  together  for  health,  so  all 
members  of  the  community  must  work  together  for  mu- 
nicipal, state,  or  national  welfare. 

A  single  individual,  without  help  or  companionship, 
and  without  the  aid  of  tools  and  implements  made  by 
other  hands,  is  one  of  the  most  helpless  creatures  that 
the  mind  can  imagine.  Jn  that  situation  he  could  not  fell 
a  tree,  nor  build  a  house  worthy  of  the  name.  He  could 
not  with  his  empty  hands  i)rotect  himself  from  wild  beasts 
or  the  unkind  elements.  But  as  the  race  gathered  into 
families,  and  families  combined  into  clans  and  tribes,  and 
these  combined  to  form  nations,  always  applying  and 
practicing  co-operation,  the  result  is  seen  in  the  progress 
of  the  race  and  the  develoi)ment  of  civilization. 

lU 


CHAPTKR  I. 

While  all  great  enterprises  depend  for  their  successful 
accomplishment  on  co-operation  of  many  minds  and 
hands,  it  is  not  always  true  that  the  fruits  and  benefits 
of  the  enterprise  inure  to  those  whose  efforts  made  the 
success  of  the  enterprise  possible.  Under  the  system  of 
business  management  which  has  developed  into  the  pre- 
sent "Industrial  System"  now  almost  universally  applied 
to  the  industries  of  the  world,  the  building  and  financing 
and  management  of  the  industry  arc  in  the  hands  of  a 
comparatively  few  individuals,  co-operating  in  those 
phases  of  the  enterprise,  while  the  manual  work  of  opera- 
tion and  producing  the  goods  for  which  the  enterprise 
was  formed  is  usually  done  by  wage-workers,  toiling  for 
stipulated  pay. 

The  most  elementary  principles  of  justice  and  equity 
suggest  that  there  should  be  devised  some  plan  or  method 
by  which  the  profits  earned  by  an  industry  should  be 
distributed  among  all  the  parties  contributing  by  their 
money,  their  brains,  and  their  labor  to  the  production  of 
the  goods  turned  out,  such  distribution  to  be  proportion- 
ate to  the  contribution  which  each  has  given  to  the  enter- 
prise. An  attempt  has  been  made  in  a  few  scattered  con- 
cerns to  evolve  some  plan  of  profit-sharing  among  the 
employes  and  workmen  by  which  such  an  equitable  dis- 
tribution of  profits  has  been  approximated.  The  one 
great  difficulty  in  all  these  efforts  has  been  the  fact  that 
while  it  has  been  found  fairly  satisfactory  so  long  as  the 
enterprise  is  profitable,  when  the  capital  invested  therein 
suffers  serious  impairment  or  total  loss,  that  loss  falls 
wholly  on  the  capitalist.  The  employe  who  shared  in 
the  profits  during  prosperous  times,  bears  no  part  of  the 
loss  when  adversity  comes. 

It  is  no  part  of  the  purpose  of  this  work  to  suggest 
a  plan  or  method,  by  which  labor  and  capital  can  share 

12] 


CO-OPERATION. 

on  fair  and  equitable  terms  in  the  results  of  a  great  in- 
dustry ;  but  it  is  here  referred  to  as  one  of  the  great  prob- 
lems, now  before  the  industrial  world  for  solution.  The 
statesman  or  student  of  social  economy,  or  captain  of  in- 
dustry, or  labor  leader,  whether  great  or  humble,  whether 
eminent  or  obscure,  who  can  solve  the  problem  and  sug- 
gest a  plan  or  method,  by  which  the  rules  of  right  and 
justice,  fairness  and  equity  can  be  observed  in  the  dis- 
tribution of  the  products  of  an  industry,  among  all  the 
factors  contributing  to  the  production,  will  be  a  public 
benefactor,  and  such  a  solution  will  be  a  most  valuable 
contribution  to  the  higher  welfare  of  mankind. 

While  the  problem  involves  many  complexities  and  in- 
tricacies yet,  in  view  of  what  human  ingenuity  has  ac- 
complished in  solving  other  problems  which  would  seem 
much  more  involved  and  difficult,  its  solution  would  not 
seem  impossible.  It  is  of  the  greatest  importance  to  the 
happiness  and  well-being  of  the  race  to  determine  and 
declare  what  are  the  just  and  equitable  rights  and  rela- 
tions of  humanity  in  their  dealings  with  one  another. 
Especially  in  these  times  must  attention  be  given  to  the 
equalizing  of  opportunities  whereby  men  may  live  to- 
gether more  justly  and  without  the  exploitation  of  any 
class  of  workers. 

A  co-operative  business  concern  may  be  defined  as  one 
organized  and  operated  as  a  joint  co-partnership,  dealing 
only  with  its  co-partners,  and  distributing  the  profits  and 
sharing  the  losses  arising  from  the  business  on  the  basis 
of  what  each  co-partner  has  contributed  to  the  enterprise. 
The  origin  of  the  i)ractice  of  conducting  business  organ- 
izations on  the  co-operative  i)lan  is  shrouded  in  the  mists 
of  traditions  and  therefore  cannot  be  stated  with  certain- 
ty. Some  authorities  believe  that  the  first  successful  co- 
operative business  organizations  were  established  in  China 


CHAPTER  I. 

many  centuries  ago ;  but  definite  information  as  to  the 
nature,  character,  plans,  and  methods  of  these  co-operative 
experiments  by  the  Chinese  is  not  available. 

Origins  of  Co-o{>erative  Business. 

During  the  closing  years  of  the  eighteenth  century  there 
was  founded  in  England  by  the  weavers  of  the  mills  of 
Bradford  a  co-operative  institution  which  is  still  in  oper- 
ation and  with  a  marvelous  record.  At  the  outset  a 
handful  of  men  established  the  institution  for  the  co- 
operative buying  of  a  few  staple  necessities  of  life.  They 
were  led  to  do  this  because  of  the  reduced  price  at  which 
such  articles  could  be  obtained  in  large  quantities,  suffi- 
cient, indeed,  to  supply  the  entire  group,  as  compared 
with  the  price  which  each  must  pay  when  buying  the 
smaller  quantity  required  for  his  single  family  needs. 
The  saving  shown  by  this  experiment  soon  led  them  to 
the  addition  of  other  articles  to  the  list  of  supplies.  The 
membership  increased  very  rapidly.  Without  detailing 
the  history  of  this  movement,  suffice  it  to  say  that  this 
experiment  has  extended  its  activities  to  many  other 
cities;  and  has  expanded  the  list  of  commodities  which 
it  handles  to  include  practically  everything  in  the  line  of 
merchandising  that  can  be  named.  They  have  established 
in  distant  lands  plantations  where  ihey  cultivate  and  ob- 
tain their  own  supplies  of  teas  and  coffee.  They  have 
established  for  their  own  source  tjf  supply,  great  factories 
for  manufacturing  their  supplies  of  clothing,  boots  and 
shoes,  and  many  other  articles.  The  volume  of  business 
handled  by  these  co-operative  merchandising,  manufac- 
turing, and  distributing  institutions  each  year  in  England 
is  enormous ;  and  the  successful  and  efficient  way  in  which 
this  tremendous  co-operative  business  is  being  handled 
has  won  the  admiration  of  the  commercial  and  financial 
world. 

[4] 


CO-OPERATION. 

The  success  of  these  co-operative  institutions  in  Eng- 
land led  to  their  establishment  on  similar  plans  and  with 
similar  aims  and  objects  in  many  of  the  English  Colonies 
throughout  the  world.  The  principles  on  which  these  in- 
stitutions are  operated  have  been  copied  by  all  the  nations 
of  Europe.  In  Germany,  France,  Austria,  Russia,  Italy, 
Denmark,  and  other  European  countries,  (in  fact  all 
parts  of  the  world)  the  growth  and  development  of  co- 
operation and  the  practical  application  of  its  principles 
have  been  truly  phenomenal. 

Conditions  of  Successful  Co-o^eration, 

Wherever  the  co-operative  institutions  have  been  estab- 
lished, they  have  been  the  same  in  their  essential  plan  and 
nature.  They  spring  from  the  same  social  and  economic 
conditions,  minister  to  the  same  needs  and  necessities,  and 
achieve  the  same  results.  To  organize  and  operate  such 
an  institution  successfully,  the  community  must  be  rather 
densely  populated,  consisting  mainly  of  persons  of  small 
means  and  generally  dependent  upon  their  daily  wages 
for  their  incomes.  These  persons  must  have  intelligence, 
and  a  similarity  of  tastes  and  interests.  There  must  exist 
among  them  a  strong  element  of  mutual  trust,  confidence 
and  dependence.  These  conditions  are  usually  found  most 
highly  developed  among  laborers,  mill,  mine  and  factory 
employes,  clerks,  shop  and  store  assistants,  wage-earners 
and  salaried  employes  with  small  or  moderate  incomes. 
By  systematic  and  persistent  application  of  even  the  small 
contributions  which  a  large  number  of  individuals  in  the 
stations  in  life  above  described  can  spare  from  their  in- 
come (while  each  contribution  may  seem  small  and  trifl- 
ing) the  aggregate  will  suffice  to  capitalize  a  co-operative 
concern  of  quite  respectable  magnitude,  and  produce  re- 
sults   very    helpful    and    beneficial    to    the    membership. 


CHAPTER  I. 

When  a  co-operative  concern  of  this  character  is  planned 
and  operated  on  an  economical  basis,  and  is  prudently 
and  honestly  conducted  by  operatives  skilled  in  the  line  of 
business  to  which  the  enterprise  is  devoted,  benefits  and 
advantages  will  result  which  could  not  be  secured  by  the 
individuals  working  for  themselves. 

In  various  parts  of  the  United  States  it  is  true  that 
there  have  been  many  unsuccessful  experiments  made  in 
co-operative  effort  in  manufacturing,  merchandising  and 
distribution  of  commodities.  While  in  isolated  points  co- 
operative concerns  of  this  character  are  still  in  operation, 
there  have  been  none  whose  success  has  been  so  notable 
as  to  attract  serious  attention.  There  has  been  in  recent 
years,  however,  a  very  noticable  growth  of  general  public 
interest  in  certain  lines  of  co-operative  effort,  and  while 
few  have  achieved  great  magnitude,  it  is  very  encourag- 
ing to  note  that  the  principles  of  co-operation  are  being 
applied  to  a  great  variety  of  lines  in  a  rapidly  widening 
area,  and  in  fast  growing  numbers.  It  is  worthy  of  note 
that  this  application  of  the  idea  of  co-operation  has  been 
adopted  most  rapidly  by  the  farmers  and  rural  dwellers 
of  Ameriea,  while  in  Europe  its  principal  application  has 
been  in  the  towns  and  cities. 

Exarri'^les  of  Co-oj>erative  Concerns. 

As  examples  of  the  successful  application  of  co-oper- 
ation in  America,  there  can  be  named  the  citrus 
growers  of  California,  who  co-operate  in  the  mar- 
keting of  their  fruit,  and  in  the  purchase  of  their 
supplies  and  machinery  for  conducting  their  busi- 
ness; the  fruit  growers  of  Florida,  and  in  Oregon  and 
Washington,  Texas,  and  other  states  co-operate  in  like 
manner.  The  truck  and  market  gardners  along  the  south 
Atlantic  Coast  pursue  a  plan  of  co-operative  marketing, 

[6J 


CO-OPERATION. 

and  in  the  purchase  of  their  supplies  of  seeds,  fertilizers 
and  implements.  In  many  parts  of  the  country  may  be 
found  co-operative  grain  elevators,  creameries,  and  cheese 
factories.  The  dairymen  of  Wisconsin,  which  is  now  the 
leading  dairy  state  of  the  Union,  market  most  of  their 
dairy  products  through  the  medium  of  a  co-operative 
selling  agency  that  is  highly  successful,  and  maintains 
distributing  agencies  in  many  of  the  larger  cities. 

A  very  striking  example  of  co-operation  is  found  in  the 
numerous  mutual  co-operative  Insurance  Companies  that 
carry  a  tremendous  volume  of  the  fire,  hail,  and  storm 
insurance,  especially  in  rural  communities.  Co-operative 
telephone  companies  are  especially  common  and  popular 
among  the  farmers  of  the  country  and  are  still  supplying 
local  service  to  a  surprisingly  large  number  of  patrons. 
All  these  ventures  in  co-operation  (and  many  others  along 
various  lines  that  might  be  mentioned)  are  rapidly 
familiarizing  the  American  people  with  the  idea,  and 
educating  them  in  the  principles  and  practices  of  co- 
operation. 

The  errors  and  defects  that  will  always  be  found  in  the 
early  efforts  along  every  line  of  endeavor,  are  being  under- 
stood and  avoided,  and  very  rapidly  these  experiments 
in  co-operation  are  being  reduced  to  a  system,  adopting 
safeguards  which  experience  has  shown  to  be  needful ; 
imposing  plans  and  methods  of  supervision  and  oversight 
that  are  at  once  a  safeguard  and  a  stimulus  to  these  enter- 
prises ;  and  thus  each  year  these  co-operative  efforts  and 
enterprises  are  becoming  more  and  more  a  beneficial  fac- 
tor in  American  economic  life. 

Building  Associations  as  Co-o{>erattve  Institutions. 

One  form  of  c«j-operative  effort  has  been  remarkably 
successful  in  this  country.  This  is  found  in  what  is  most 
widely  known  as  building  associations.     It  is  the  purpose 

17] 


CHAPTER  I. 

of  this  work  to  treat  of  this  type  of  institutions;  to  trace 
their  origin  and  development:  to  descrihe  the  various 
plans  and  methods  on  which  they  are  operated;  to  give 
some  account  of  their  usefuhiess  and  benefits;  to  call  at- 
tention to  the  size  and  magnitude  to  which  they  have  at- 
tained ;  make  some  suggestions  as  to  plans  and  methods 
by  which  they  are  organized  and  conducted,  and  point  out 
the  way  by  which  this  practical  co-operative  institution 
may  be  utilized  in  every  community  for  the  common 
benefit  of  every  citizen,  and  become  a  vital  factor  of  great 
efficiency  in  stimulating  business  and  adding  materially  to 
the  community  wealth. 


[8] 


CHAPTER  II. 

Building  Associations. 

Name  and  Title. 

For  the  sake  of  brevity  we  shall  use  throughout  this 
work  the  name  "Building  Associations"  as  a  generic 
term  for  the  institutions  to  be  considered  in  this  volume. 
This  type  of  organization  is  known  by  a  wide  variety 
of  names  and  titles  in  different  parts  of  the  United  States. 
In  some  parts  of  the  country  the  various  state  laws  pre- 
scribe certain  words  and  terms,  which  must  be  made  part 
of  the  name.  In  other  states,  the  laws  mention  certain 
words  that  must  not  be  used  in  the  name.  For  example, 
Massachusetts  requires  that  these  institutions  must  use 
the  term,  "Co-operative  Bank,"  as  a  part  of  the  title.  In 
other  states  they  are  expressly  prohibited  from  using  the 
word  "Bank"  as  a  part  of  the  name.-  As  a  result  it  will 
be  found  that  they  are  variously  designated  as  "Building 
Associations,"  "Building  and  Loan  Associations,"  "Sav- 
ings Associations,"  "Savings  and  Loan  Associations," 
"Co-operative  Banks,"  "Homestead  .A^ssociations,"  "Mu- 
tual Loan  .Associations"  and  many  other  names  made  up 
of  varying  combinations  of  these  several  terms  above 
mentioned. 

It  is  a  frequent  jiracticc  in  selecting  the  name  to  adopt 
as  an  initial  part  thereof,  some  word  of  special  signifi- 
cance, such  as  "Peoples,"  "Citizens,"  "Merchants,"  "Me- 
chanics," "Security,"  "Fidelity,"  "Equitable,"  "Working- 

(91 


CHArTER  II. 

mens,"  "Wage-Earners"  and  "Home."  A  still  more 
common  practice  is  to  use  the  name  of  the  town  or  city 
in  which  the  association  is  organized  as  a  part  of  the 
name.  Many  associations  are  organized  among  the  em- 
ployes of  a  single  large  industry,  and  associations  of  this 
character  quite  often  utilize  the  name  of  the  lirm  or  com- 
pany where  they  are  employed  as  a  part  of  their  title. 

Definition. 

A  building  association  is  a  mutual,  co-operative  finan- 
cial institution,  most  usually  operating  under  articles 
of  incorporation  issued  by  the  state,  and  composed  of 
members  who  have  thus  associated  themselves  together  for 
their  mutual  benefit  and  financial  advantage.  The  mem- 
bership of  a  building  association  may  be  broadly  divided 
into  two  classes,  designated  saving  members  and  borrow- 
ing members.  The  former  use  the  association  as  a  place 
where  they  may  deposit  from  time  to  time,  such  sums  as 
they  are  able  to  spare  from  their  wages,  salary  or  other 
income.  The  borrowing  members  use  the  associations 
as  a  place  where  they  can  borrow  funds  for  use  in  buying, 
building  or  repairing  a  home,  or  for  other  useful 
purposes. 

The  members  save  money  together. 

They  lend  money  to  each  other. 

They  divide  the  profits  with  each  other. 

They  work  together  to  help  each  other. 

The  Aim  and  Purpose. 

The  aim  and  purpose  of  a  building  association  is  to 
aid  and  encourage  its  members  to  learn  and  practice 
thrift  by  regular  systematic  savings,  and  to  provide  ways 
and  means  by  which  every  family  may  procure  a  home. 

[10] 


BUILDING  ASSOCIATIONS. 

Origin  of  Associations. 

The  first  building  association  in  America  of  which  we 
have  any  authentic  record,  was  organized  at  Frankford, 
Pennsylvania,  now  a  suburb  of  Philadelphia.  Among 
the  gentlemen  especially  active  in  its  organization  were: 
Dr.  Henry  Taylor,  and  two  manufacturers,  named  Samuel 
Pilling  and  Jeremiah  Horrocks.  These  gentlemen  had 
gathered  some  information  regarding  the  plans  and 
methods  by  which  institutions  of  this  kind  were  being 
operated  in  England,  and  believing  that  such  an  associa- 
tion might  be  useful  in  this  country,  laid  their  plans  be- 
fore Jesse  V.  Castor,  a  lawyer,  and  Isaac  Schallcross,  a 
conveyancer.  As  a  result  of  the  conferences  between 
these  gentlemen,  there  was  organized  on  January  3,  1831, 
an  association  called  the  "Oxford  Provident  Building 
Association  of  Frankford." 

It  appears  that  in  the  formation  of  this  association,  the 
founders  followed  as  nearly  the  plans  of  the  English  asso- 
ciations as  they  could  from  the  ideas  they  had  gathered 
by  observing  them  in  operation,  or  by  perhaps  partici- 
pating in  them.  Judge  Endlich  in  his  work  on  "Build- 
ing Associations,"  however,  intimates  that  they  had  no 
printed  directions.  The  plan  on  which  it  was  organized 
and  operated  was  what  is  now  designated  as  the  Term- 
inating Plan.  It  was  restricted  to  the  members  whn 
organized  it,  or  who  joined  soon  after  it  was  formed. 
This  plan  is  more  fully  described  in  Chapter  VII. 

It  is  interesting  to  note,  however,  that  while  succeed- 
ing years  and  extended  experiences  have  seen  the  build- 
ing association  idea  greatly  clevelop  and  pass  through  an 
experience  of  evolution  anrl  change  in  many  of  its  minor 
features,  yet  a  study  of  the  fundamental  ideas  will  dis- 
close that  this  small,  modest,  humble  association  had  in 

111! 


CHAPTER  II. 

its  plan  the  essential  features  that  still  characterize  the 
entire  system  of  building  associations  to  this  day. 

In  the  beginning  little  was  heard  of  the  association. 
It  did  its  work  among  its  own  members  in  an  unobtrusive 
way  and  achieved  the  objects  for  wdiich  it  was  organized. 
Then,  in  accordance  with  its  plan  the  association  passed 
out  of  existence.  It  is  doubtful  if  any  of  its  own  members 
or  officers  at  any  time  realized  the  true  value  and  signifi- 
cance of  the  movement  they  were  originating.  They 
doubtless  considered  it  as  a  restricted,  neighborhood  or- 
ganization, formed  to  solve  some  of  the  financial  prob- 
lems with  which  they  were  individually  confronted,  by 
a  plan  of  mutual,  self-helping  co-operation. 

When,  however,  we  come  to  measure  that  early  asso- 
ciation by  the  results  which  have  come  from  the  remark- 
able development  of  its  essential  idea,  it  can  be  seen  to- 
day, that  the  formation  of  that  first  building  association 
was  an  event  of  immeasurable  importance  in  the  growth 
of  our  nation. 

The  Essential  Features  of  the  Association. 

Among  the  essential  features  of  this  association  which 
have  been  retained  in  all  its  successors,  is  the  idea  of 
mutuality;  an  equality  of  rights,  powers,  privileges  and 
opportunity  in  the  organization  and  operation,  control 
and  management  of  the  association;  and  also  an  equal 
interest  and  liability  in  its  results. 

Its  original  membership  was  made  up  chiefly  of  work- 
ingmen  and  zvage-canicrs.  This  is  a  striking  feature  of 
building  associations  today. 

Another  feature,  present  from  the  beginning,  is  the 
opportunity  afforded  the  member  to  make  a  regular 
systematic  deposit  with  the  association  of  the  sums  he 
can  save  from  his  wages.  This  feature  aims  to  teach  the 
virtue  of  thrift  in  a  practical  way. 

[12] 


BUILDING  ASSOCIATIONS. 

The  foundation  plan  of  the  association  provides  tliat 
it  be  cheaply  and  economically  managed.  This  is  strik- 
ingly shown  by  the  fact  that  the  expenses  of  management 
have  for  many  years  been  about  Vio  of  i  per  cent,  of  the 
volume  of  business  handled. 

This  association  is  to  be  a  local  institution,  confining 
its  investments  to  the  local  community  in  which  it  oper- 
ates. The  wisdom  of  this  idea  is  proven  by  the  fact  that 
practically  every  attempt  to  extend  the  investments  of  an 
association  to  a  wide  radius,  beyond  the  territory  with 
which  its  officers  were  personally  familiar,  has  proven 
unsafe  and  often  disastrous. 

The  funds  of  the  first  association  were  applied  to  aid 
its  members  to  procure  homes.  This  was  in  fact  the  one 
outstanding  feature  of  the  plan  and  the  high  purpose  for 
which  the  association  was  organized.  The  wish  and  de- 
sire to  own  their  own  home,  was  in  fact,  the  primary, 
fundamental  inspiration  on  which  the  first  building  asso- 
ciation was  formed,  and  has  ever  continued  to  be  the 
shining  pole  star  which  has  guided  and  directed  the  pro- 
gress of  these  building  associations  to  the  present  day. 
The  desire  to  own  a  home  is  one  of  the  primary,  natural 
instincts  of  every  real  man  or  woman.  An  institution 
organized  and  operated  on  a  fair  and  equitable  plan 
which  has  for  its  object  the  gratifying  of  that  desire, 
is  sure  to  make  a  strong  ai)peal  to  all  humanity.  The 
constant  appeal  which  building  associations  have  always 
made  to  this  deep-seated  human  desire,  is  the  real  secret 
of  their  great  success. 

Saving  and  Lending. 

Building  associations  occupy  a  two-fold  relation  to  the 
communities  in  which  they  operate;  first,  they  are  Sav- 
ing SociETif:s,  aimed  to  promote  thrift;  second,  they 
are  Lending  Socikties,  aimed  to  promote  home  owner- 

(131 


ciiArTi'k  11. 

ship.  The  saving  feature  is  nameil,  first,  because 
some  one  must  save,  before  any  one  can  lend.  The  use 
of  tlie  word  "Building-"  in  the  njuiie  of  these  associations, 
while  accurate  at  the  beginning  of  the  movement,  has  be- 
come traditional  because  of  the  changes  which  have  de- 
veloped in  the  evolution  of  these  societies.  In  the  early 
years  of  the  movement  it  was  quite  common  for  these 
associations  to  buy  tracts  of  land,  and  subdivide  it  into 
lots,  contract  for  and  superintend  the  erection  of  homes 
thereon  and  dispose  of  them  to  their  membership.  Since 
this  plan  of  operation  involved  considerable  risk,  and  must 
always  be  to  some  extent  speculative  and  uncertain ;  and 
as  experience  in  this  line  of  work  occasionally  proved 
unprofitable  and  involved  the  association  in  losses  (some- 
times to  a  serious  extent)  that  line  of  activity  has  been 
wholly  abandoned  by  building  associations. 

In  most  of  the  states,  building  associations  would  not 
now  be  permitted  to  do  the  actual  building  of  homes  for 
its  members;  so  that  "Building"  in  the  sense  of  actual 
construction  work  is  no  longer  any  part  of  the  business 
done  by  these  institutions.  While  the  work  is  no  longer 
being  done,  the  name  still  clings,  and  is  often  misleading 
to  those  who  are  not  familiar  with  the  real  plans  and 
methods  of  these  associations.  A  name  which  would  at 
once  be  strictly  accurate  and  descriptive,  w^ould  be  "Co- 
operative Savings  and  Loan  Associations." 

The  Saving  Feature. 

As  a  saving  i7istitution,  building  associations  have  be- 
come a  most  important  factor  in  the  work  of  teaching 
thrift  and  stimulating  the  habit  of  saving.  The  practice  of 
thrift,  and  systematic  saving  should  be  encouraged,  and 
must  become  a  national  characteristic,  if  our  land  is  ever 
to  become  truly  and  solidly  prosperous.  Thrift  is  a  word 
of  broader  meaning  than  saving.     It  denotes  a  higher 

1141 


BUILDING  ASSOCIATIONS. 

and  more  intelligent  use  of  accumulations,  than  merely 
saving  them.  It  involves  placing  the  savings  to  practical 
and  profitable  use.  A  saving  person  might  justify  the 
name,  by  merely  hiding  his  savings  away,  where  they 
would  earn  nothing  for  him,  nor  be  of  any  use  to  any 
one  else.  A  thrifty  person  will  make  such  use  of  his 
savings  that  they  will  at  the  same  time  earn  profits  for 
him  and  be  useful  to  others. 

Building  associations  provide  ideal  facilities  for  the 
practice  of  thrift.  They  offer  a  plan  which  encourages 
the  saving  of  money,  and  makes  it  easy  and  convenient. 
At  the  same  time  they  employ  these  savings  in  a  way 
which  is  profitable  for  him  who  saves,  and  extremely 
useful  and  helpful  to  him,  who  on  giving  proper  security, 
is  able  to  enjoy  the  use  of  these  savings. 

The  practice  of  systematic  saving  should  be  especially 
urged  upon  the  young.  The  self-denial  involved  in  the 
practice  of  this  habit  and  the  resulting  feeling  of  inde- 
pendence enjoyed  by  those  who  realize  their  savings  are 
a  substantial  protection  against  misfortune  or  unemploy- 
ment, tends  to  strengthen  their  character,  gives  them 
greater  self-respect  and  inspires  a  higher  respect  and  con- 
fidence in  them,  in  the  minds  of  others.  The  poet  Burns 
urges  us  to  save  money. 

"Not  for  to  hide  it  in  a  hedge, 
Nor  for  a  train  attendant, 
But  for  the  glorious  privilege 
Of  being  independent." 

Membershij)  in  a  building  association  is  a  constant 
incentive  and  stimulus  to  thrift  and  economy;  it  teaches 
the  practice  of  self-denial;  encourages  resistance  to  ex- 
pensive habits;  awakens  ambition  and  a  desire  for  higher 
and  l)etter  modes  of  living;  and  i)rovides  a  way  to  satisfy 


CHAPTER  II. 

siicli  desires.  All  these  influences  tend  to  strengthen  the 
character  and  result  in  a  higher  and  hetter  type  of  citizen- 
ship. 

The  attractions  of  a  building  association  as  a  savings 
institution  are  peculiarly  strong.  It  is  a  money  saving 
institution,  inasmuch  as  a  part  of  its  system  is  the  con- 
stant urge  for  regular  systematic  saving.  It  is  a  money 
making  institution,  since  its  present  system  of  investment 
is  such  as  to  secure  to  the  members  such  rates  of  interest 
on  their  savings  as  can  be  earned  in  the  money  market  of 
the  community.  It  is  a  safe  place  for  savings,  for  the  rea- 
son that  the  nature  of  the  investments  made  by  building 
associations  is  such  that  losses  of  a  serious  nature  are 
rarely  experienced.  It  is  a  convenient  place  for  savings, 
since  savings  in  these  associations  can  usually  be  v^ith- 
drawn  on  demand  or  on  reasonable  short  notice.  Lastly, 
it  is  especially  popular  for  the  reason  that  each  member 
shares  in  the  management  and  control  of  the  association, 
in  the  election  of  its  officers,  and  in  fixing  its  plan  and 
policy. 

In  short,  a  building  association  is  the  practical  example, 
the  concrete  expression  of  the  idea  of  democracy,  applied 
to  a  financial  institution.  It  has  no  group  of  preferred 
stockholders  drawing  a  high  rate  of  dividend  from  the 
earnings  of  the  small  depositors,  but  all  members,  whether 
their  savings  are  large  or  small,  receive  the  same  rate  of 
interest,  and  their  dividend  depends  on  the  amount  they 
have  saved. 

Advantages  of  T^embershi^. 

The  advantages  derixed  from  a  membership  in  a  build- 
ing association  are  many  and  various.  It  provides  a  safe 
and  convenient  place  to  deposit  whatever  sums  the  mem- 
bers can  spare  from  their  wages  or  income.  Funds  so 
deposited  are  less  liable  to  be  spent  extravagantly  for 

[10] 


BUILDING  ASSOCIATIONS. 

useless  thing's.  The  funds  also  are  beyond  the  reach 
of  the  sneak  thief  and  pickpocket.  An  unlucky  fire  has 
destroyed  many  a  saving  fund  which  had  been  gathered 
by  many  months  of  self-denying  economy,  and  left  hid- 
den about  the  house;  when  if  it  had  been  deposited  from 
time  to  time  in  a  building  association,  it  would  not  have 
been  lost. 

The  dividends  which  even  small  sums  will  earn,  is  an 
item  of  income  obtainable  in  no  other  way.  There  is  no 
safe  form  of  investment,  by  which  the  small  savings  can 
be  made  to  draw  interest  at  so  profitable  a  rate,  as  is 
obtained  in  a  building  association.  A  person  with  a  large 
sum,  say  a  thousand  dollars,  can  invest  it  in  a  safe  first 
mortgage,  which  is  everywhere  recognized  as  one  of  the 
highest  forms  of  security.  But  where  the  sum  ought  to 
be  invested  is  but  ten  dollars,  this  high-grade  security  is 
not  available  since  ten  dollar  mortgages  are  not  made.  If 
a  hundred  persons  each  put  ten  dollars  into  a  building 
association,  the  association  could  invest  the  entire  sum  in 
a  mortgage,  and  by  this  means  each  of  the  contributors 
to  the  fund  would  get  the  same  high  security  and  the 
same  rate  of  income  assured  the  party  who  invests  the 
thousand  dollars. 

Indeed,  the  member  of  the  building  association  has 
decided  advantages  over  the  individual  who  invests  his 
own  money.  The  single  investor  owns  the  mortgage  out- 
right. He  takes  all  the  risk  of  the  investment,  must  de- 
fray all  cost  of  time,  trouble  and  expense  in  hwking  after 
it,  collecting  the  interest  and,  at  maturity,  collecting  the 
principal.  He  must  see  to  it  that  the  insurance  is  kept 
in  force  and  ta.xes  paid  on  mortgaged  premises ;  and 
whether  or  not  the  mortgage  must  be  foreclosed.  Again, 
if  the  borrower  should  die,  and  litigation  of  any  kind 
result  in  the  settlement  of  his  estate  (and  this  is  almost 
invariably  the  case)  all  these  costs  and  expenses  and  work 

[17] 


CHAPTER  11. 

and  time  and  trouble  must  be  borne  by  the  owner  of  the 
mortgage.  The  members  of  building  associations  have  all 
these  matters  attended  to  by  the  association,  as  a  part 
of  its  routine  business,  without  in  any  way  interfering 
with  their  dividends. 

Furthermore,  if  the  single  investor  in  a  mortgage  which 
he  owns,  has  the  best  of  good  fortune,  receives  his  interest 
promptly  and  the  mortgage  is  paid  at  maturity,  it  will 
often  occur  that  some  interval  will  elapse  before  he  can 
re-invest  his  funds  and  he  loses  the  interest  on  his  money 
during  the  interim.  On  the  other  hand,  the  funds  of 
building  association  members  draw  dividends  regularly, 
since  there  are  no  periods  when  its  funds  are  idle.  Where 
the  individual  investor  in  mortgages  has  a  loss  on  any 
such  investment,  it  all  falls  on  him ;  while  if  a  loss  should 
be  sustained  by  a  building  association  on  one  of  its  mort- 
gages, the  loss  is  distributed,  pro  rata  against  all  the  assets 
of  the  association,  and  so  does  not  fall  on  any  one  person 
or  any  group  of  members. 

Under  the  most  modern  plan  of  associations,  a  reserve 
fund  is  provided  for  to  meet  such  losses  as  the  foregoing, 
so  that  in  actual  experience  it  is  extremely  rare  that  divi- 
dends are  affected  by  reason  of  such  losses. 

These  facts  are  so  well  known  and  so  thoroughly  under- 
stood by  the  public,  that  this  safety  of  investment,  the 
high  class  of  the  securities  taken,  and  the  constant,  un- 
varying income  received,  have  all  been  potent  factors  in 
attracting  ever-increasing  numbers  to  seek  membership 
in  these  associations. 

Unlimited  Savings. 

Under  the  original  i)lan  on  which  building  associations 
were  organized,  and  in  some  types  of  their  more  recent 
development,    there    were    strict    limits    placed    on    the 

118] 


BUILDING  ASSOCIATIONS. 

amounts  which  members  were  permitted  to  deposit  in 
these  associations.  There  has  been  a  constant  tendency, 
however,  to  expand  and  make  more  and  more  Hberal  the 
privileges  of  members  to  utiHze  these  associations  as  in- 
stitutions for  saving.  In  most  states,  there  is  no  Hmit  to 
the  amount  which  a  member  is  permitted  to  deposit.  In 
a  few  states,  the  law  still  prescribes  the  limits,  but  these 
are  being  gradually  raised  and  extended.  The  real  object 
and  purpose  of  fixing  such  a  limit,  was  to  prevent  the 
management  of  the  association  being  monopolized  by  a 
few  individuals  of  means;  hence  the  law  prescribed  the 
number  of  shares  which  any  person  could  hold  in  an 
association. 

In  other  states,  the  problem  was  met  in  another  way. 
Instead  of  restricting  the  number  of  shares  which  a  mem- 
ber could  hold,  the  law  left  that  undetermined,  but  pro- 
vided that  no  member  could  cast  more  than  twenty  votes 
in  his  own  right.  The  same  popular  control  of  the  asso- 
ciation is  secured  in  other  states  by  the  provision  that 
each  member  could  cast  but  one  vote,  regardless  of  the 
number  of  shares  he  owns. 

This  broadening  of  the  powers  of  associations  and  en- 
larging their  ability  to  receive  larger  sums  of  money 
has  added  much  to  the  usefulness  of  these  institutions  and 
greatly  increased  the  useful  work  which  they  are  able 
to  do. 

The  original  building  associations  were  based  on  the 
idea,  that  every  member  was  eventually  to  utilize  his 
membership  f(jr  the  purpose  of  buying  or  building  a  home. 
It  was  j)riniarily  an  association  composed  of  borrowers 
or  prospective  jjorrowers.  Adherence  to  this  i)lan  must 
of  necessity  restrict  the  activities  of  an  association  within 
very  narrow  limits.     Where  every  member  was  striving 

[1!M 


CHAPTER  II. 

to  secure  his  loan  first,  it  resulted  in  such  keen  rivalry 
among  the  members,  that  in  many  cases,  loans  were 
made  at  an  exorbitant  cost  to  the  borrower.  With  the 
introduction  of  a  broader  plan  by  which  members  were 
admitted  who  did  not  intend  to  buy  or  build  a  home,  but 
joined  merely  to  enjoy  the  opportunity  which  the  associa- 
tion offered  to  exercise  thrift  and  habits  of  saving,  it  was 
quickly  found  that  this  broadening  of  the  plan  provided 
greater  volume  of  funds  available  for  the  prospective 
home-owner,  and  enabled  the  association  to  greatly  ex- 
pand its  usefulness  as  an  aid  to  home-ownership. 

The  Lending  Feature. 

As  a  lending  institution,  extending  its  loans  in  order  to 
aid  its  borrowers  to  procure  homes,  the  building  associa- 
tions have  been  especially  useful.  Very  few  wage-earners 
or  workingmen,  when  they  first  attempt  to  procure  a 
home  for  themselves  and  their  families,  have  sufficient 
cash  in  hand  to  pay  the  entire  cost  of  purchase  or  of  build- 
ing. Such  transactions  are  almost  invariably  financed 
through  the  medium  of  a  mortgage  loan.  In  the  task  of 
paying  off  such  a  loan,  the  average  borrower  usually  re- 
lies on  the  sums  that  he  can  save  from  his  wages  or  in- 
come. The  sums  which  can  be  spared  from  this  source 
are  seldom  large,  and  are  received  by  him  at  frequent 
intervals,  depending  on  the  character  of  his  employment. 
The  ideal  type  of  loan  for  an  individual  in  such  circum- 
stances, is  one,  on  which  he  can  make  each  pay-day  a  pay- 
ment large  enough  to  cover  the  accrued  interest,  and  an 
additional  sum  to  apply  on  the  principal  of  his  debt.  It 
should  also  be  a  loan  which  can  be  carried  by  the  bor- 
rower without  renewal,  until  these  periodical  payments 
will  have  paid  the  entire  debt. 

120] 


BUILDING  ASSOCIATIONS. 

In  paying  this  type  of  a  loan,  the  borrower  can  adjust 
his  payments  to  meet  his  regular  income  and  has  no 
future  maturity  date  to  look  forward  to  when  a  large 
amount  of  debt  will  fall  due.  Under  the  terms  of  loans 
made  by  most  building  associations  the  term  of  loan  may 
be  extended  from  six  to  sixteen  years  or  even  longer  if 
necessary,  and  the  sum  of  the  borrower's  periodical 
payments  are  often  no  larger  than  the  rent  he  would  be 
required  to  pay  for  a  property  of  equal  value. 

It  was  demonstrated  quite  early  in  the  experience  of 
these  associations  that  many  men,  lacking  courage  to  place 
large,  short-termed  mortgages,  would  willingly  undertake 
the  purchase  of  a  home  through  the  aid  of  building 
associations.  The  usual  form  of  mortgage  loan,  on  which 
the  borrower  pays  only  the  interest  as  it  accrues,  the 
entire  principal  falling  due  at  some  future  date,  is  wholly 
unsuited  to  the  needs  of  the  ordinary  wage-earner,  who 
wishes  to  buy  or  build  a  home.  Such  a  loan  is  seldom 
reduced,  but  is  permitted  to  run  to  maturity,  when  it  may 
be  repeatedly  renewed  and,  perhaps  at  last,  never  paid. 
It  becomes  a  burdensome  heritage  to  the  family. 

The  building  assf)ciation  plan  of  a  loan  is  handled  dif- 
ferently. The  regular  periodical  payments  become  part 
of  the  routine,  just  like  paying  rent ;  the  debt  is  regularly 
and  systematically  reduced  and  finally  extinguished,  with- 
out any  periodical  uneasiness  of  being  renewed. 

How  Borrowing  Hel^s  Saving. 

Another  most  important  result  usually  follows  in  the 
case  of  a  man  who  has  carried  a  loan  on  this  plan.  Paying 
a  loan  i)i  this  "ivay,  has  taught  the  borrorocr  the  habit  of 
saving  money  out  of  his  wages.  When  his  home  is  paid 
for  he  usually  continues  the  habit  of  keeping  up  these 

['ill 


CHAPTER  II. 

periodical  payments.  They  arc,  however,  no  longer  be- 
ing applied  to  the  payment  of  a  debt,  but  become  a  savings 
account  which,  growing  with  the  regular  systematic  pay- 
ments, and  the  dividends  added  thereto  and  compounded, 
soon  becomes  a  fund  of  real  value.  The  habit  of  saving 
taught  by  this  effort  to  procure  a  home,  has  often  proved 
of  as  great  value  to  the  man  as  the  home  itself. 

Periodicals  Devoted  to  Building  Associations. 

At  various  times  there  have  been  a  number  of  periodi- 
cals launched  in  different  parts  of  the  United  States,  de- 
voted to  building  association  interests.  With  one  excep- 
tion these  have  all  failed  to  attract  support  sufficient  to 
make  their  eft'orts  successful,  and  for  lack  of  support 
they  have  one  by  one  suspended  publication.  The  one 
successful  publication  of  this  character,  however,  is  The 
American  Building  Association  Neivs,  founded  in  1880, 
and  published  in  Cincinnati  and  Chicago. 

This  journal  has  been  declared  the  official  organ  of  the 
United  States  League  of  Local  Building  and  Loan  Asso- 
ciations and  of  most  of  the  State  leagues.  It  is  the  recog- 
nized authority  on  all  matters  relating  to  building  asso- 
ciation affairs.  It  has  been  ably  edited  and  managed  and 
has  been  a  most  important  factor  in  directing  and  protect- 
ing the  interests  of  these  institutions.  On  many  occasions 
its  educational  value  to  Federal  and  State  legislators  has 
been  recognized.  Every  association  should  receive  this 
journal  regularly,  and  keep  a  complete  file  carefully  pre- 
served for  reference.  A  growing  number  of  associations 
throughout  the  country  have  adopted  the  plan  of  supply- 
ing a  copy  of  this  journal  regularly  to  each  director  and 
officer  of  the  association,  as  a  part  of  the  current  ex- 
penses of  the  association.    Such  a  plan  should  be  adopted 

[22] 


BUILDING  ASSOCIATIONS. 

by  every  association  in  the  country.  An  officer  or  direc- 
tor, who  is  a  faithful  reader  of  this  journal,  gathers  from 
it  a  mass  of  information  of  the  highest  value  on  all  phases 
of  building  association  activity. 

It  has  been  the  fixed  policy  of  this  journal  to  open  its 
pages  for  free  discussion  of  all  matters  of  especial  interest 
to  building  associations.  Its  many  useful  features,  in- 
cluding its  editorials,  its  legislative  and  statistical  news, 
association  advertising,  judicial  decisions,  and  all  general 
news  relating  to  association  interests,  make  this  journal 
indispensable  to  all  who  are  entrusted  with  the  manage- 
ment of  these  associations. 

Some  of  the  most  successful  and  progressive  associa- 
tions are  adopting  the  plan  of  ordering  special  editions 
of  this  journal  in  quantities  sufficient  to  supply  their  en- 
tire membership.  These  special  editions  are  sent  at  the  end 
of  each  semi-annual  fiscal  period  and  contain  one  or 
more  special  pages  devoted  to  that  particular  association, 
giving  its  financial  statement  and  such  other  items  of 
special  local  interest  as  may  seem  important.  This  has 
been  found  especially  valuable  publicity  for  the  associa- 
tions, and  the  number  who  follow  this  practice  will  doubt- 
less largely  increase  as  the  benefits  of  the  journal  are 
more  generally  understood. 

The  efficient  and  valuable  service  of  The  American 
Building  Association  News  in  looking  after  the  interests 
of  the  associations  of  the  country  has  been  repeatedly 
exemplified  in  recent  years.  It  may  be  said  that  every 
revenue  bill  wliicli  has  been  a(loi)ted  in  Congress  since 
1898  had  in  its  original  form  some  provisions  that  would 
have  been  highly  injurious,  if  not  fatal,  in  its  effects  on 
building  associations,  had  it  been  enacted  in  its  original 
form.  This  did  not  arise  from  any  feeling  of  enmity 
toward  these  institutions  on  the  part  of  Congress,  but  was 

12:5] 


CHAPTER  II. 

due  to  the  fact  that  these  associations  are  so  little  known 
or  understood  by  the  average  legislator, — unless  he  had 
enjoyed  personal  relations  with  one — that  the  legislators 
who  drafted  the  bills  did  not  realize  the  effect  which  its 
terms  would  have  on  these  associations.  In  every  instance 
The  American  Building  Association  News  was  swift  to 
detect  the  dangerous  situation  and  sound  the  alarm  in  its 
pages,  and  in  every  case,  Congress,  when  the  situation 
was  called  to  its  attention,  and  the  injustice  of  the  orig- 
inal terms  of  these  bills  was  demonstrated,  consented  to 
make  such  changes  in  every  one  of  these  revenue  bills 
exempting  building  associations  from  the  burdens  which 
Congress  has  always  admitted  would  have  been  unjust 
and  improper.  These  changes  and  amendments  have 
saved  building  associations  enormous  sums  of  money, 
the  payment  of  which  would  have  greatly  burdened  them 
and  might  possibly  have  driven  many,  and  it  may  be 
all  of  them,  out  of  business. 

Changes  of  Management  Announced  in  the  News. 

While  the  fundamental  principles  of  building  asso- 
ciations are  subject  to  but  slight  changes,  yet  with  practi- 
cal experience  in  conducting  them,  there  are  many  new 
ideas  being  constantly  developed  in  the  matter  of  book- 
keeping and  accounting;  in  the  forms  and  books  and 
blanks  used  in  the  conduct  of  their  business ;  in  new  ideas 
of  advertising  and  publicity ;  and  all  these  are  being  con- 
stantly presented  and  discussed  in  this  journal.  Judicial 
decisions  on  matters  relating  to  various  phases  of  building 
association  business  are  being  frequently  handed  down, 
and  most  of  these  important  cases  are  reported  in  The 
News.  At  the  meetings  of  the  State  leagues  and  of  the 
U.  S.  League,  papers  are  presented  by  the  leading  building 

[24J 


BUILDING  ASSOCIATIONS. 

association  men  of  the  country,  in  which  matters  of  vital 
interest  are  discussed,  and  the  best  of  these  papers  are 
reproduced  in  The  Nczvs. 

All  these  facts  combine  to  make  this  pubhcation  indis- 
pensable to  every  one  who  holds  official  position  in  a 
building  association,  and  desires  to  render  efficient  service 
to  his  association ;  and  every  member  of  these  associations 
will  find  this  journal  well  worth  careful  and  regular 
reading. 

Recognition  by  Congress. 

The  value  to  the  associations  of  their  recognition  by 
Congress,  must  not  be  measured  alone  by  the  actual 
money  saved  to  each  association.  The  standing  prestige 
given  to  these  associations  from  such  a  source  is  of  far 
greater  value  than  mere  money  can  measure.  By  this 
recognition  on  the  part  of  Congress  it  proclaims  that  these 
associations  are  so  useful  in  the  economic  life  of  the 
nation,  that  it  would  be  unwise  to  impose  on  them  any 
unnecessary  burdens.  On  the  contrary  they  should  be 
fostered  and  encouraged  by  all  reasonable  means  to  con- 
tinue the  helpful,  uplifting  work  done  in  teaching  thrift 
and  building  homes  and  adding  to  the  concrete,  tax-pay- 
ing wealth  of  the  nation. 

This  recognition  by  Congress  has  been  especially  help- 
ful to  the  associations  in  creating  public  confidence  in 
them,  and  is  doubtless  one  of  the  great  underlying  causes 
and  explanations  for  the  wonderful  growth  which  has 
come  to  tlicni  in  the  past  (|uarter  of  a  century. 

While  the  growth  of  these  institutions  has  been  very 
great,  yet  their  modesty  in  advertising  their  merits  is 
seen  in  the  fact  that  the  ordinary  business  man  or  citizen 
has  a  very  limited  knowledge  of  their  character  and  knows 
but  little  of  their  j)lans  aiul  methods.     This  is  also  true 


CHAPTER  II. 

of  the  lawmakers  of  tlie  country.  At  almost  every  ses- 
sion of  each  state  legislature  measures  are  introduced 
which,  if  enacteil  into  law.  would  he  highly  detrimental  to 
the  success  and  prosperity  of  building  associations.  It  is 
frequently  the  case  that  these  acts  have  been  drawn  by 
parties  who  have  no  ])ractical  experience  or  accurate  in- 
formation regarding  building  associations. 

In  some  States  the  State  building  association  leagues 
make  a  practice  of  having  the  name  of  every  mem- 
ber of  the  legislature  placed  on  the  mailing  list  of 
The  American  Building  Association  News.  It  has 
been  found  that  the  result  of  this  has  been  that  the 
legislators  are  thus  given  an  opportunity  to  inform 
themselves  regarding  these  institutions,  and  when  legis- 
lation affecting  them  comes  up  for  consideration, 
they  are  much  better  informed  on  the  subject,  and 
their  action  is  based  on  a  more  thorough  knowledge 
and  a  fuller  conception  of  the  merits  of  the  measure  on 
which  they  are  asked  to  pass.  Building  associations  have 
but  little  to  fear  from  legislators  who  are  familiar  with 
their  plans  and  methods  and  who  know  the  meritorious 
work  they  are  doing.  There  is  no  surer  way  to  bring 
this  knowledge  to  their  attention,  than  to  lay  before  each 
of  them  each  month  a  copy  of  The  Ameircan  Building 
Association  Nezvs. 

Statistical  Information. 

The  first  attempt  to  make  a  nation-wide  survey  of  the 
building  associations  of  the  United  States,  was  made  in 
1893,  by  Carroll  D.  Wright,  who  was  then  U.  S.  Com- 
missioner of  Labor.  The  official  compilation  of  building 
association  statistics  was  issued  as  a  government  publica- 
tion in  1894. 

[26] 


BUILDING  ASSOCIATIONS. 


Commissioner  Wright  presented  a  paper  at  the  first 
meeting  of  the  United  States  League  of  Local  Building 
and  Loan  Associations,  held  at  Chicago.  Illinois,  June 
27th  to  30th,  1893,  in  which  he  gave  the  following 
statistics  of  building  and  loan  associations,  these  being 
figures  compiled  by  his  investigators,  prior  to  the  publi- 
cation of  his  official  report,  which  appeared  early  the 
following  year. 


States. 


No.  of 
Asso- 
ciations. 


Members. 


Assets. 


Arkansas    

Catifornia    

Colorado    

Connecticut    

Delaware    

District  of  Columbia 

Georgia     

Florida    

Illinois    

Indiana    

Iowa     

Kansas     

Louisiana   

Maine    

Maryland   

Massachusetts   

Michigan    

Minnesota    

Mississippi    

Missouri    

Nebraska    

New   Hampshire    . .  . 

New  Jersey 

New    York 

Ohio    

Pennsylvania    

Rhode   Island 

Tennessee    

Utah     

Wisconsin     

Other   States 

Total    


69 

ia9 

60 

15 

24 

32 

37 

37 

518 

S.^O 

100 

164 

21 

36 

200 

115 

99 

91 

41 

418 

47 

17 

282 

447 

723 

1,100 

7 

143 

11 

67 

450 


19,493 

81,677 

16,950 

3,222 

5,331 

24,451 

10,453 

10,524 

146,571 

90,157 

36,865 

46,330 

6.569 

10,064 

62,294 

54,484 

27,968 

25,708 

11,393 

74,620 

13,278 

8,857 

87,019 

1.56,660 

227,535 

254,918 

2,506 

40,398 

3.108 

18,082 

127,125 


5,851,205 

13,090,802 

5,088,004 

433,578 

2.410,862 

6,821,861 

3,137,603 

3,159,418 

55.821,888 

21,390,550 

9,049,310 

13,907,211 

3,391,557 

2,020,293 

14,921,607 

14,574,334 

8,395,207 

7,716,806 

3,726,291 

35,446,429 

3,985.603 

1.137,719 

30,871,644 

32,820,563 

59,204,826 

80,860,976 

791,410 

12.126,410 

932,801 

5.681,605 

38,160,032 


6,860 


1,665,456 


$496,928,405 


These  statistics  are  inserted  here  for  convenient  comj)ar- 
ison  with  the  corresponding  statistics  for  the  year,  1919, 
which  disclose  the  growth  and  progress  of  the.se  associa- 
tions in  the  United  States  during  tiie  intervening  twenty- 
six  years. 

[271 


CHAPTER  II. 


The  following  table  gives  statistics  of  the  building  and 
loan  associations  of  the  United  States  for  the  year 
1918-19/" 


States. 


Num- 
ber of 
associa- 
tions. 


Total 
member- 
ship. 


Total  assets. 


Increase  in 
assets. 


Increase 
in 
mem- 
bership. 


Ohio    

Pennsylvania    .... 

New  Jersey 

Massachusetts    .. . 

Illinois 

New    York 

Indiana    

Nebraska    

Maryland    

Michigan     

California    

Missouri 

Kentucky    

Kansas    

Louisiana    

Dist.   of  Columbis 

Wisconsin   

North    Carolina... 

Iowa    

Arkansas     

Washington.*    . .  . . 

Oklahoma    

West    Virginia. .  .  . 

Minnesota    

Colorado   

Maine    

Rhode    Island. . . . 

Connecticut    

South    Carolina..  . 

Alabama    

Oregon    

New    Hampshire. . 
South    Dakota'... 

Tennessee   

North    Dakota 

Texas    

Montana    

New    Mexico 

Arizona    

Vermont    

Other    States 

Total 


723 

2,124 

792 

186 

tiSl 

24i* 

346 

73 

590 

70 

86 

158 

122 

74 

64 

20 

79 

133 

57 

42 

37 

44 

52 

64 

38 

38 

S 

22 

134 

8 

10 

22 

14 

12 

10 

25 

18 

13 

4 


842,754 

725,000 

348,805 

247,224 

240,000 

200,111 

198,418 

104,363 

87,963 

82,565 

40,409 

65,147 

63,266 

64,679 

50,366 

38,951 

54,393 

40,000 

35,440 

21,386 

39,944 

l^.SOO 

23,530 

21,800 

15,483 

15,057 

12,205 

15,000 

13,500 

10,460 

10,204 

8,642 

5,857 

5,497 

5,835 

7,531 

5,441 

3,515 

2,400 

790 

227,670 


$359,559,588 

355,000,000 

169,308,867 

140,201,034 

119,712,407 

89,017,871 

80,468,883 

57,151,546 

41,782,242 

37,923,798 

37,120,999 

29,260,489 

28,439,546 

28,157,391 

27,586,719 

24,250,684 

23,365,389 

19,453,000 

12,385,755 

12,234,608 

10,287,315 

9,134,704 

8,890,789 

8.890,021 

7.823,972 

7,251,168 

6,377,469 

5,250,000 

=  4,816,301 

4,267,463 

4,198,083 

3,682,699 

3,603,836 

3,070,181 

2,911,970 

2,484,957 

2,094,836 

1,454,728 

802,699 

352,055 

108,328,334 


$87,818,009 
30,734,607 
1,092,954 
13,605,997 
6,183,882 
2,945,042 
2,355,966 
2,605,916 

(') 

2,264,438 

1.192,552 

2,490,345 

1,354,264 

2,157,224 

1,674,791 

1,850,689 

3,478,021 

1,846,000 

2,746,903 

1,651,161 

»  4,156,862 

2,580,529 

771,658 

189,621 

1,134,989 

579,929 

439,033 

380,262 

(') 

(») 

(•) 

346,027 


1137,673 

74,852 

170,030 

244,901 

» 14,548 

e) 

64,264 

6,865,960 


76,064 
47,089 
19,742 

>60l 

>  6,800 

540 

13,991 

2,434 

13,524 

11,818 

1909 

420 

1 1,708 

2,578 

1,870 

3,781 

2,000 

2,405 

338 

16,374 

1,068 

2,030 

1220 

5,288 

98 

706 

100 

(') 

(') 

(•) 

88 


331 

60 

875 

1,202 

130 

(») 

41 

10,322 


,484     4,011,401     1,898,344,346     129,202,171       172,789 


1  Decrease. 

*  Dues  paid  in  as  per  report  to  Comptroller  General. 
'  Included  in  other  States. 

♦  Washington  Savings  &  Loan  Association,  Seattle,  with  net  assets  1917  of 
$0,364,280,  converted  to  Mutual  Savings  Bank,  not  included.  Actual  increase  in 
assets  $2,197,427. 

•  Report  i.ssued  biennially.     Figures  1917  used. 

•  Prepared  by  Mr.  H.  F.  Cellarius,  of  Cincinnati,  O.,  Secretary  of  the  U. 
S.  League  of  Building  Associations. 

[28] 


CHAPTER  III. 

Historical  Review. 

Societies  in  England. 

Building  societies  existed  in  England  as  early  as  1798. 
The  first  one  of  which  we  have  a  full  and  authentic 
account  is  the  Union  Building  Association,  founded  at 
Greenwich,  England,  in  January,  1809.  The  purpose  of 
this  organization,  as  declared  in  its  rules  and  regulations, 
was  the  raising  by  monthly  subscription  of  a  fund  to  be 
expended  in  building  houses.  These  houses,  as  they  were 
built,  were  deeded  to  the  different  members  of  the  associa- 
tion. The  membership  of  this  society  was  restricted  to 
the  number  of  fifty ;  the  whole  number  of  shares  was  two 
hundred,  valued  at  two  hundred  and  ten  pounds  each. 
Payments  were  made  in  monthly  installments  of  two 
guineas  each.  A  member  was  subject  to  a  fine  in  default 
of  payment,  and  if  he  continued  to  fail  to  make  his  pay- 
ments, the  money  already  paid  in  was  under  certain  con- 
ditions forfeited  to  the  s<Kiety. 

Every  share  in  this  as.sociation  represented  a  dwelling 
house.  The  hou.ses  were  built  under  the  supervision  of 
the  society's  inspector  and  by  certain  tradesmen  specified 
in  its  articles.  They  wore  distributed  among  the  members 
by  lot,  a  new  house  being  built  as  often  as  the  society  had 
sufficient  funds.  hVom  the  time  a  house  was  finished,  the 
member  owning  it  paid  to  the  society  five  per  cent,  per 
annum  and  the  regular  monthly  i)ayment  on  his  share 
until  the  close  of  the  society,  at  which  time  each  member 
should  have  paid  in  the  full  amount  of  the  two  hundred 


CHAPTER   11 1. 

atul  ten  pound  share  held  by  liini.  Members  who  were 
successful  in  the  allotment  of  the  houses  as  they  were 
completed,  were  required  lo  give  satisfactory  security  for 
the  continuance  of  their  payments  on  their  shares  and 
of  the  interest  on  the  sums  which  the  society  had  advanced 
for  the  construction  of  the  house.  Certain  other  rules 
were  also  observed,  but  space  forbids  a  discussion  of 
them. 

One  of  the  earliest  building  associations  established 
was  that  by  the  Earl  of  Selkirk,  at  Kircudbright,  in  the 
southern  part  of  Scotland,  in  1815.  The  Earl  of  Selkirk 
was  a  gentleman  of  large  means  and  philanthropic  ideas, 
and  he  is  said  to  have  expended  considerable  time  and 
study  in  perfecting  and  developing  the  scheme  of  this 
society. 

The  organization  of  similar  associations  gradually  ex- 
tended into  the  manufacturing  districts  of  England,  Wales 
and  Ireland.  They  were  afterwards  established  in  Lon- 
don, and  soon  became  general  throughout  Great  Britain, 
Australia  and  the  other  British  possessions.  In  1836 
these  societies  had  increa.sed  to  such  numbers  and  attained 
such  magnitude  and  public  importance  that  an  act  of 
Parliament  was  passed  affording  facilities  for  their  forma- 
tion and  regulating  their  government  and  management. 
Since  that  period  they  have  had  a  flourishing  growth. 
They  report  to  the  Registrar,  who  publishes  annual  sta- 
tistics relating  to  them. 

The  Movement  in  Other  Foreign  Countries. 

The  good  work  accomplished  in  the  United  States  has 
caused  co-operators  in  other  countries  to  study  the  de- 
velopment of  building  associations  in  America  and  obtain 
information  as  to  their  plans  and  methods.  In  France, 
Dr.  Chas.  Pranard,  having  been  a  close  student  of  this 

[30] 


HISTORICAL  REVIEW. 

movement  in  America,  prepared,  at  the  request  of  the 
French  government,  documents  covering  the  work  in  the 
United  States.  Dr.  Pranard  has  published  a  valuable 
work  on  this  subject.  As  a  result  of  his  studies,  the 
government  of  France  has  passed  legislation  exempting 
their  building  societies  from  taxation,  and  supporting 
them  with  investments  of  government  money.  The  re- 
sult is  seen  in  the  rapid  growth  and  internal  development 
of  these  organizations  in  the  French  Republic. 

In  South  Africa,  New  Zealand,  and  the  various  sub- 
divisions of  Australia,  and  in  British  Guiana,  and  in 
South  America,  these  associations  have  been  established 
also,  and  are  successfully  developing  the  w<3rk  of  teaching 
thrift  and  building  homes.  Spain,  Italy,  Germany,  Aus- 
tria, the  Scandinavian  countries,  and  other  European 
nations  are  following  the  same  lines.  It  is  clear  that,  as 
an  educational  factor,  ilie  example  set  by  the  achievements 
of  building  associations  in  America  and  the  expansion  of 
this  co-operative  saving  and  home-building  idea,  will  ob- 
tain a  firm  footing,  not  only  in  Europe,  but  in  all  nations 
of  the  world. 

Early  History  in  the  United  States. 

For  some  years  there  was  controversy  over  the  ques- 
tion of  when  and  where  the  first  building  association 
was  organized  in  the  United  States.  Several  cities  claimed 
the  honor;  but  the  final  decision  of  the  (juestion  has  been 
to  award  Frankford,  a  suburb  of  Philadeli)hia,  the  honor 
of  being  the  birthplace  of  the  building  association  move- 
ment in  America. 

The  following  account,  by  Thomas  \V.  O'Brien,  of  the 
Philadelphia  I'ar  gives  an  interesting  description  of  the 
origin  of 

i:Ji| 


CHAPTER  HI. 

The  First  Building  Association  in  the  United  States. 

"Like  its  brother,  the  savings  bank,  the  building  association 
practically  owes  its  birth  to  the  thriftiness  and  foresight  of  the 
Scotch  financiers  and  philanthropists.  The  Karl  of  Selkirk's  Asso- 
ciation was  founded  in  Scotland  in  1815,  and  through  correspon- 
dence with  friends  and  relatives  in  the  old  country  its  progress  was 
carefully  noted  on  this  side  of  the  water. 

The  first  building  association  formed  in  the  United  States  was 
organized  in  Frankford,  a  borough  having  a  population  of  about 
2,000  inhabitants  and  located  in  Oxford  Township,  Philadelphia 
County,  Pennsylvania,  which  is  now  a  part  of  the  City  of  Phila- 
delphia. On  January  3d,  1831 ,  according  to  the  call,  'A  meeting  of 
sundry  inhabitants  of  the  borough  of  Frankford  was  held  at  the 
house  of  Thomas  Sidcbotham,  for  the  purpose  of  forming  an  asso- 
ciation to  enable  the  contributors  thereof  to  build  or  purchase 
dwelling  houses.'  A  constitution  for  the  government  of  the  associa- 
tion was  adopted,  and  the  name,  'The  Oxford  Provident  Building 
Association  of  Philadelphia  County,'  was  selected.  Subscription 
books  were  opened ;  forty  members  signed  the  Constitution ;  enrolled 
their  names  and  subscribed  for  shares. 

At  the  next  meeting  held  on  January  10th,  1831,  the  organization 
was  completed.  Isaac  Whitlock  was  elected  president,  Isaac  Schal- 
cross.  Secretary  and  Samuell  Pilling,  a  mill  owner  of  considerable 
means,  treasurer;  twelve  trustees  were  also  elected. 

The  Oxford  Provident  Association  matured  in  ten  years ;  the 
first  payment  was  made  on  January  17th,  1831  and  the  last  payment 
on  January  11th,  1841,  a  share  then  being  worth  $500.00.  The  affairs 
of  the  association  were  not  formally  wound  up  until  June  10th, 
1841,  but  no  payments  were  made  after  January  11th,  1841,  and  this 
is  the  date  of  the  maturity  of  the  first  series  of  shares  issued  by 
any  association  in  the  new  world. 

The  origin  of  building  associations  in  this  country  has  been  a 
subject  for  dispute.  Most  of  the  claimants  were  easily  disposed  of, 
but  Philadelphia  and  Brooklyn  had  some  old  associations,  Brooklyn's 
dating  from  1836.  The  question  of  Brooklyn's  priority  was  settled 
when  is  was  proved  that  the  society  was  not  organized  until  after 
leading  citizens  from  Brooklyn  had  made  a  trip  to  Frankford  for 
the  purpose  of  investigating  the  results  of  the  experiment  that  had 
been  started  in  this  country. 

The  original  error,  crediting  the  organization  of  the  initial  asso- 
ciation of  the  new  world  to  Brooklyn,  was  made  in  a  Georgia  case, 
Bibb  County  Loan  Association  vs.  Richards,  (21  Georgia  State  Re- 

[32] 


HISTORICAL  REVIEW. 

ports  592)  where  Judge  Lumkin  stated  that  'In  the  year  1836, 
twentj-one  years  after  the  first  one  was  estabhshed  in  Great  Britain, 
the  first  organization  of  this  kind,  called  the  Brookl>Ti  Building  and 
Mutual  Fund  Loan  Association,  was  organized  in  Brooklyn,  New 
York; 

This  opinion  was  followed  by  Judge  Endlich,  in  his  work,  'The 
Law  of  Building  Associations,'  and  by  Howard  Wurtz  Page,  in 
his  article  on  building  associations  in  the  first  edition  of  the  'Amer- 
ican and  English  Encyclopedia  of  Law.'  In  later  editions  of  the 
encyclopedia,  however,  the  misstatement  is  corrected  and  the  subject 
of  the  first  building  association  in  this  country  is  no  longer  a  subject 
for  controversy." 

Gustav  Koerner,  in  his  book,  "The  German  Element  in 
the  United  States,"  speaking  of  the  influential  and  pubhc- 
spirited  citizens  of  Pennslyvania  (pages  73  and  74),  says 
of  Dr.  Wm.  Schmoele,  "In  the  year  1845  he  returned  to 
Philadelphia.  We  have  especially  to  thank  him  for  the 
establishment  of  the  first  building  association  in  Phila- 
delphia, which  was  organized  under  the  name  of  'The 
American  Deposit  and  Building  Association.'  He  was 
also  the  founder  of  numerous  other  societies  of  this  kind." 
It  must  be  remembered  that  in  the  year  1846,  Frankford 
was  not  included  in  the  city  of  Philadelphia,  and  as  the 
early  building  associations  were  on  the  "terminating" 
plan,  the  Frankford  association  had,  in  1846,  completed 
its  work  and  gone  out  of  existence.  In  1846,  Dr. 
Schmoele,  through  his  brother,  residing  in  Brooklyn, 
N.  Y.,  succeeded  in  organizing  an  association  in  that  city,i 
and  in  the  following  year,  1847,  through  his  friend,  WooI-\ 
sieffer.  Dr.  Schmoele  secured  the  organization  of  an  asso- 1 
ciation  in  Baltimore,  Md.  It  is  believed  that  the  oldest  \ 
building  association  that  is  now  operating  in  the  United 
States  is  "The  Decatur  Building  Association  of  Frank- 
ford," Philadelphia,  Pa.,  which  was  organized  in  January, 
1849,  ^^^  has  led  a  useful  and  prosperous  existence  to  the 
present  day. 


CHAPTER  III. 

Similar  associations  were  organized  soon  afterward  in 
New  York  City,  Newark  and  Hoboken,  New  Jersey; 
Boston,  Massachusetts,  and  in  other  cities  of  the  North. 
In  1850,  their  formation  was  begun  in  Charleston,  South 
Carolina,  Savannah,  Georgia,  and  other  important  South- 
ern cities.  These  associations  continued  to  spring  up 
from  time  to  time  throughout  the  country,  spreading 
from  city  to  city  and  from  State  to  State,  until  now 
they  are  found  established  in  every  State  in  the  Union. 

The  first  association  in  Ohio  was  organized  in  Cincin- 
nati, on  July  8th,  1868.  Dr.  Peter  A.  Keck  was  its 
founder,  and  was  long  honored  as  the  father  of  Ohio 
building  associations.  He  lived  to  see  Ohio  the  leading 
building  association  state  of  the  Union,  with  723  asso- 
ciations, a  membership  of  842,000,  and  assets  of  more 
than  $359,000,000.  He  lived  to  a  ripe  old  age,  depart- 
ing this  life  on  January  12.  1919. 

The  Mutual  Home  and  Savings  Association  of  Dayton, 
Ohio,  was  organized  in  187 1.  It  is  especially  mentioned 
here  for  the  reason  that  a  few  years  later  it  adopted  a 
new  constitution  and  by-laws,  which  made  it  the  pioneer 
of  that  type  of  association,  now  known  as  "The  Dayton 
Plan,"  "The  Ohio  Plan"  or  the  "Permanent  Plan"  of 
building  and  loan  associations.  The  experience  of  this 
association  on  this  plan  was  eminently  successful  and  its 
growth  and  development  so  rapid  that  it  soon  became 
one  of  the  largest  and  strongest  building  associations 
in  the  United  States,  which  position  of  leadership  it  held 
for  some  years,  but  the  application  of  this  plan  to 
associations  located  in  larger  cities  and  more  fruitful 
fields  resulted  in  the  formation  of  associations  that  gradu- 
ally overtook  and  surpassed  it  in  size  and  strength, 
although  it  is  still  one  of  the  leaders  in  the  building  asso- 
ciation movement  of  the  Nation. 


[34] 


CHAPTER  IV. 

The  Results  Achieved  by  Building 
Associations. 

The  results  which  follow  the  establishment  and  opera- 
tion of  these  associations,  referred  to  in  Chapter  III,  are 
well  illustrated  in  the  city  of  Philadelphia,  where  they 
originated.      Probably  one-half  of  the  dwelling  houses 
of  that  city  have  been  built  through  the  agency  of  these 
associations,  and  much  of  the  present  prosperity  of  the 
city  is  doubtless  due  to  their  work  and  influence.     It  is 
through  this  agency  that  the  city  has  obtained  the  proud 
and  significant  title  of  "City  of  Homes."      Thousands  of 
working  men  and  wage-earners   in  this  one  city  have 
secured  homes  through  these  associations.    This  is  merely 
given  as  an  illustration  on  a  large  scale  of  the  work  which 
these  associations  perform.     There  is  convincing  proof 
that  in  large  cities  of  the  country,  such  as  Chicago,  Balti- 
more,  Boston,   Cincinnati,   St.   Louis,   Rochester,   Troy, 
Utica,  and  Newark,  similar  conditions  in  like  proportion 
prevail.     In  the  smaller  cities  and  villages  even  a  greater 
percentage  of  home-ownership  has  been  created  through 
these  associations. 

Means  to  Financial  Advancement. 

Building,  loan  and  savings  associations  are  now  an 
important  factor  in  the  economic  life  of  the  country. 
Their  establishment  is  encouraged  by  political  economists 
and  philanthropists,  and  they  are  carefully  guarded  and 
fostered  by  legislation.     The  large  middle  class  of  our 

[35] 


CHAPTER  IV. 

population,  the  working  men  and  wage-earners  of  the 
country,  among  whom  they  prosper  and  flourish,  recog- 
nize them  as  a  practical  and  efficient  means  to  financial 
advancement.  Their  beneficient  and  economic  value  to 
the  community  is  now  acknowledged  by  all  classes,  and 
they  are  encouraged  on  every  hand  as  a  prominent  factor 
in  promoting  public  welfare.  Among  the  chief  merits 
and  advantages  of  this  institution,  attention  may  be  called 
to  the  following  features: 

( 1 )  Each  member  has  a  voice  in  its  management,  and 
each  participates  in  its  advantages  and  profits. 

(2)  It  furnishes  the  best  method  by  which  wage- 
earners  and  others  with  limited  income  can  become  their 
own  capitalist. 

(3)  Building  associations  furnish  a  better  and  safer 
opportunity  than  any  other  plan  that  has  ever  been  de- 
vised for  securing  a  liberal  return  of  profit  from  periodic 
savings  of  small  sums. 

(4)  The  industrial  class,  the  store-keeper  and  manu- 
facturers in  these  institutions  get  practical  instruction  in 
the  management  of  money  and  property. 

(5)  One  highly  important  feature  of  these  associa- 
tions lies  in  the  fact  that  they  enable  their  members  to 
secure  the  use  and  benefits  of  their  savings  in  advance  by 
enabling  them  to  borrow  funds  from  the  association  with 
which  to  build  or  buy  homes  or  embark  in  other  enter- 
prises. These  loans  they  are  privileged  to  repay  in  such 
periodic  installments  as  their  savings  will  permit.  For 
some  associations  they  are  able  to  borrow  money  on 
straight  loans,  when  that  plan  is  preferred. 

(6)  The  loan  or  credit  that  is  thus  extended  to  the 
workingmen,  to  the  w-age-earner,  the  small  merchant 
or  manufacturer,  is  an  important  factor  in  the  develop- 
ment of  this  country. 

136] 


THE  RESULTS  ACHIEVED. 

With  the  spread  of  intelligence  under  our  modern 
civilization,  there  has  been  an  ever-increasing  effort  on 
the  part  of  the  working-classes  and  those  dependent  on 
small  incomes  to  accumulate  money  and  property.  In 
order  to  become  in  any  measure  independent,  people 
relying  upon  their  own  earnings  for  income  must  con- 
stantly practice  industry  and  frugality  with  intelligent 
judgment  and  patient  perseverance.  Of  all  the  systems 
that  have  been  devised  to  aid  the  working  men  and  women 
in  this  respect,  none  has  proved  so  successful  or  efficient 
as  the  building,  loan  and  saving  association.  It  enables 
this  class  to  convert  their  wages  into  income.  Wages  are 
earned  by  brains  or  hands.  Income  is  earned  from  in- 
vestments. When  brains  fail,  or  hands  cease  working, 
wages  stop,  but  income  does  not  cease.  A  strong  point 
in  favor  of  these  associations  is  the  purely  democratic, 
mutual  and  equitable  nature  of  their  advantages. 

Financial  institutions  may  be  divided  into  two  classes: 
Mutual,  co-operative  institutions,  and  capital  institutions. 
In  the  capital  stock  institutions  the  control,  management 
and  ownership  of  the  institution  is  in  the  hands  of  the 
relatively  small  group,  which  owns  the  capital  stock,  and 
who  operate  for  the  chief  purpose  of  earning  the  highest 
possible  dividend  for  themselves.  The  bulk  of  the  earn- 
ings of  these  capital  stock  institutions  comes  from  the 
use  of  the  funds  dei)osited  by  the  masses  which  receive 
a  restricted  rate  (^f  interest  from  these  deposits.  In  a 
mutual  or  co-operative  concern,  like  a  building  associa- 
tion, every  member  and  depositor  receives  all  the  earn- 
ings which  his  investment  produces.  All  share  alike  in 
the  earnings  of  the  institution,  in  proportion  to  the  amount 
which  they  have  invested  therein. 

In  capital  stock  financial  institutions,  practically  the 
only  relation  which  the  dejwsitor  sustains  to  it  is  the  mere 
mechanical  act  of  making  his  deposit. 

[37] 


CHAPTER  IV. 

In  the  building-,  loan  and  savings  association,  the 
conditions  are  entirely  different,  for  here  the  de- 
positor has  an  active  ownership  and  interest  in  the 
enterprise.  He  has  a  voice  and  influence  in  these  associa- 
tions, and  there  is  no  preferred  class  to  be  benefited  at  the 
expense  of  the  other  members.  There  is  no  preferred 
class  of  stockholders  receiving  large  dividends  from  the 
earnings  produced  by  the  deposits  of  the  little  fellow. 
Even  though  a  capitalist  becomes  a  member  and  sub- 
scribes for  a  large  number  of  shares,  and  deposits  large 
sums  of  money,  he  can  derive  no  benefit  or  advantage  on 
any  dollar  of  his  investment  that  can  not  be  commanded 
by  the  humblest  member.  He  must  enter  upon  exactly 
the  same  terms  as  are  required  of  other  members  and 
must  stand  on  an  equal  footing  with  them  throughout. 

Moreover,  stockholders  elect  their  own  directors,  choos- 
ing from  their  own  number  such  persons  whom  they  wish 
to  clothe  with  authority  to  administer  the  afifairs  of  the 
organization.  By  using  discretion  in  selecting  intelligent 
and  honest  managers,  and  then  holding  them  to  strict 
accountability  for  their  policy  and  management,  an  eco- 
nomical and  faithful  administration  of  the  business  of 
the  association  is  assured. 

Associations  open  to  a  member  the  opportunity  to  share 
in  the  profits  on  small  savings  which  can  not  be  secured  in 
any  other  type  of  institution.  The  deposits  of  all  the 
members,  when  combined,  form  a  sum  of  money  of  such 
proportion  as  commands  ways  and  means  of  investments, 
not  possible  for  the  individual  members  acting  indepen- 
dently through  their  individual  savings.  Under  this 
system  members  really  become  their  own  self-made  cap- 
italists. The  collective  savings  of  the  many  members,  who 
do  not  need  their  money,  form  a  sum  out  of  which  other 
people  who  do  need  the  money  may  supply  their  wants; 
and  on  such  conditions  both  borrowers  and  lenders  reap 

[38] 


THE  RESULTS  ACHIEVED. 

mutual  benefits  from  the  transaction.  They  are  iodepen- 
dent  of  private  capitalists  and  other  financial  institutions, 
and  save  for  themselves  the  tribute  they  must  otherwise 
pay  to  some  money-lender,  should  they  desire  to  build 
a  home,  to  embark  in  business  or  to  make  any  other  use  of 
money. 

The  wage-earner,  trained  in  habits  of  economy,  sav- 
ing and  thrift  by  the  influence  of  the  association,  and 
aroused  to  a  laudable  ambition  by  the  opportunity  it  sug- 
gests and  offers,  becomes  himself  a  borrower  and  a  user 
of  capital,  and  supplies  his  needs  for  money  from  the 
accumulated  capital  of  his  associates. 

Methods  of  Operation. 

The  methods  by  which  these  associations  are  operated 
insure  the  minimum  expense  in  handling  their  funds. 
For  many  years  past,  the  expense  of  operating  the  build- 
ing associations  of  the  United  States  has  averaged  about 
eight-tenths  of  one  per  cent,  of  the  volume  of  business 
handled,  a  record  of  efficiency  and  economy  that  can 
not  be  equalled  by  any  other  type  of  financial  institution. 
At  the  same  time  the  opportunities  and  sources  of  profit 
are  larger  and  cannot  be  secured  to  the  same  extent,  ex- 
cept through  a  co-operative  effort  of  this  nature. 

Not  only  may  a  fair  rate  of  interest  be  derived  from  an 
investment  in  the  share  of  a  well-conducted  association, 
but  through  the  system  adopted  by  nearly  all  of  these 
societies  the  members  receive  a  greater  income  yield  than 
can  be  derived  from  any  other  safe  financial  institution. 
In  the  early  days  of  building  association  development, 
fines  and  forfeitures  enforced  against  deHncjuent  members 
constituted  a  considerable  source  of  profit,  but  these  fea- 
tures of  building  association  management  are  fast  dis- 
appearing. The  same  is  true  of  the  i)reniiums  which 
were  formerly  charged  on  loans.     The  undeclared  divi- 


CHAPTER  IV. 

dend  on  withdrawals  forms  a  considerable  source  of  profit. 
Thus  it  will  be  seen  that  these  institutions  furnish  unusual 
opportunities  for  securing  profits  upon  small  savings ; 
opportunities  which  capitalists  can  not  secure  for  them- 
selves except  upon  exactly  the  same  terms  and  conditions. 
Ordinarily,  a  wage-earner,  and  especially  one  having 
a  considerable  family  dependent  upon  him,  finds  great 
difficulty  in  meeting  the  demands  that  are  constantly  made 
upon  his  purse.  Too  often,  discouraged  by  circumstances, 
he  falls  into  a  most  ruinous  w^ay,  and  feels  satisfied  if 
from  week  to  week  his  net  income  meets  his  expenses. 
However  large  a  working  man's  wage  may  be,  if  he 
spends  it  all,  he  is  on  the  ragged  edge  of  hard  times ;  and 
a  short  illness,  an  unfortunate  accident,  the  loss  of  a 
job  or  any  one  of  a  hundred  little  things  that  might 
easily  happen,  will  quickly  teach  him  that  it  is  but  a  few 
steps  from  "The  Sunny  Side  of  Easy  Street"  to  "The 
Dark  Side  of  Want  Alley."  A  man  earning  one  hundred 
dollars  a  week  and  spending  one  hundred  and  five  dollars 
is  already  hard  up;  while  a  man  earning  twenty  dollars 
a  week  and  saving  some  part  of  it,  however  small,  is  on 
the  road  to  independence  and  prosperity. 

Helping  J^en  to  Independence. 

It  occasionally  happens  that  a  wage-earner,  more  am- 
bitious than  many  of  his  fellows,  sets  about  to  form  some 
plan  of  his  own  for  regular  saving,  and  then  he  gradually 
accumulates  a  sum  of  money.  This  is  sometimes  done  by 
hoarding  it  in  some  secret  receptacle,  and  sometimes  by 
carrying  it  constantly  on  his  person,  but  this  plan  of  sav- 
ing is  only  a  routine  and  mechanical  one,  and  he  gains 
nothing  thereby,  except  than  a  mere  addition  to  his  sav- 
ings. He  receives  no  interest  or  profit  on  his  savings. 
Money  thus  hoarded  is  absolutely  dead  and  useless.  It 
earns  nothing  for  the  owner,  and  it  is  withheld  from 

[40] 


THE  RESULTS  ACHIEVED. 

circulation  when  it  might  be  usefully  employed  by  those 
who  need  it,  and  by  those  who  would  willingly  pay  for 
its  use.  A  man  saving  by  this  plan  has  no  occasion  for 
the  exercise  of  his  judgment  and  gains  no  experience 
that  would  be  an  advantage  to  him  in  the  management 
of  a  large  sum  of  money  after  he  has  accumulated  it. 
Living  thus  from  day  to  day  in  ignorance  of  the  various 
means  of  accumulation  and  investment,  he  is  not  likely 
to  make  much  advance  in  the  way  of  improving  his  finan- 
cial condition.  Should  he  succeed,  through  constant 
hoarding  in  accumulating  a  considerable  sum  of  money 
of  his  own,  when  he  undertakes  to  make  an  investment 
he  must  either  run  the  risk  of  losing  all  or  part  of  his 
savings  through  his  ignorance  and  inexperience,  or  he 
must  become  dependent  upon  and  pay  for  the  skill  and 
knowledge  of  others  in  the  management  of  his  invest- 
ment. 

On  the  other  hand,  a  thrifty  saver  who  invests  his 
money  in  a  building  association  makes  that  money  render 
a  triple  service :  First,  in  earning  an  income  for  him. 
Second,  in  becoming  part  of  a  fund  which  enables  some 
fellow  workman  to  purchase  or  build  a  home  of  his  own. 
Third,  in  stimulating  business,  and  adding  to  the  com- 
munity prosperity. 

A  T^an  Is  K.ing  in  His  Own  Castle. 

The  activities  of  the  building  associations  in  construct- 
ing homes  and  pnniding  means  by  which  every  family  is 
given  a  chance  to  procure  a  home  of  its  own  is  one  of  the 
most  important  features  of  their  work.  In  recent  years 
the  housing  problem  has  become  of  great  and  ever  greater 
importance.  The  growing  ratio  of  our  people,  who  are 
living  in  rented  homes,  as  compared  with  the  luunber  that 
live  in  homes  of  their  own,  is  giving  much  concern  to 
students  of  political  economy.      In  a  representative  gov- 

[411 


CHAPTER  IV. 

ernment  such  as  ours,  it  is  of  the  highest  importance  that 
the  people  should  have  a  real,  vital  interest  in  the  owner- 
ship of  the  country.  A  citizenry,  made  up  of  renting 
tenants,  will  always  lack  the  highest  element  of  civic  pride. 
They  have  not  that  real,  vital,  personal  interest  in  the 
affairs  of  the  country  when  they  own  no  part  of  the 
country  itself.  A  tenant  citizenry  is  less  stable  and  con- 
servative than  one  made  up  of  home-owners. 

The  advantages  of  home-ownership  are  seen  in  the  in- 
creased happiness  and  contentment  of  families;  their 
greater  comfort  and  better  health ;  their  deep  interest  in 
the  beautifying  and  improving  of  the  homes  in  which  they 
live;  the  increasing  educational  advantages  and  oppor- 
tunities ;  more  economy  in  the  expenses  of  living ;  a  deeper 
interest  in  the  civic  welfare  of  their  community;  and  inde- 
pendence of  action  and  bearing  which  can  only  arise 
from  the  regular  and  intelligent  discharge  of  their  duties 
and  responsibilities  incident  to  this  natural  and  beneficial 
form  of  home  life. 

Home  Building  Tdade  Easy  and  Dignified. 

In  the  stimulation  and  encouragement  of  home  owner- 
ship, building  associations  perform  a  vital  service.  It  is 
a  matter  of  common  knowledge  that  a  vast  majority  of 
homes  must  be  built  and  financed  on  some  type  of  credit ; 
that  few  home  buyers  or  home  builders  have  at  command 
ready  cash  to  pay  the  full  value  of  the  home  they  build 
or  buy.  The  accepted  form  in  which  this  home-building 
credit  is  extended  is  almost  universally  in  the  shape  of  a 
mortgage  loan.  In  order  that  this  mortgage  loan  may 
be  upon  the  most  convenient  and  reasonable  terms,  it 
should  be  a  long-time  amortization  loan,  repayable  in 
small  periodic  sums,  each  sufficient  to  cover  the  accrued 
interest  and  an  amortization  payment  to  apply  on  the 
principal  of  the  debt.     Few  individual  capitalists  would 

[42] 


THE  RESULTS  ACHIEVED. 

care  to  make  a  loan  of  this  character,  since  it  involves  an 
investment  for  a  longer  time  than  the  average  capitalist 
cares  to  make.  Furthermore,  the  trouble,  annoyance, 
and  expense  of  collecting,  of  accepting  frequent  payments 
of  small  sums  and  the  necessary  accounting  which  such 
types  of  payments  would  require,  make  it  inconvenient 
and  undesirable  to  the  individual  investor. 

It  is  quite  common  to  hear  criticisms  of  the  policy  of 
commercial  banking  institutions  in  declining  to  make 
long-time  mortgage  loans,  but  such  criticism  is  uncalled 
for  and  unjust.  The  policy  of  commercial  banks  confin- 
ing their  investments  to  short-time  commercial  paper  is 
amply  justified  by  the  commonest  principles  of  business 
prudence  and  conservative  banking.  Much  the  larger 
part  of  the  funds  handled  by  commercial  banks  are  the 
deposits  of  their  patrons,  which  are  subject  to  with- 
drawal on  demand  check,  and  even  the  savings  accounts 
carried  by  some  of  these  institutions  are  withdrawable 
upon  comparatively  short-time  notice.  For  these  reasons 
commercial  banks  must  keep  their  assets  liquid  and  must 
not  tie  up  their  funds  in  long-time  loans,  no  matter  how 
good  the  security,  or  how  attractive  the  returns.  It 
would  be  the  height  of  business  folly  for  such  an  institu- 
tion to  invest  its  funds  in  long-time  securities  when 
those  funds  are  subject  to  withdrawal  on  demand  or 
short-time  notice.  The  universal  judgment,  both  of  prac- 
tical bankers  and  of  students  of  finance  is  that  such  long- 
time loans  must  be  made  sparingly,  if  at  all,  by  commer- 
cial banks,  and  every  country  that  has  a  banking  system 
has,  by  law,  hedged  in  and  restricted  the  powers  of  such 
banks  to  make  long-time  loans.  Indeed,  no  principle  of 
the  banking  business  is  better  settled  than  this. 

The  aggregate  volume  of  the  business  of  mortgage 
loan  investments  in  this  country  is  so  very  great  as  to 
justify    a    thoroughly    organized,    efficiently    operated, 

fl31 


CHAPTER  IV. 

nation-wide  system  of  financial  institutions,  organized 
and  operated  for  the  sole  purpose  of  making  mortgage 
loans  of  this  character  and  applying  all  its  resources,  and 
restricting  their  activities  to  this  one  type  of  investment. 
Building  and  loan  associations  are  the  only  type  of  insti- 
tutions known  to  the  economic  life  of  this  country  which 
confines  their  business  to  this  type  of  investment. 

Home  Building  Will  Beautify  American  Life. 

For  some  years  prior  to  the  outbreak  of  the  great 
world  war  in  1914,  the  number  of  homes  constructed  in 
America  averaged  about  600,000,  and  the  volume  of 
mortgage  loans  required  to  finance  this  amount  of  con- 
struction is  estimated  to  have  been  about  $2,500,000,000. 
It  is  believed  that  for  some  years  following  the  close  of 
this  war  there  will  be  unusual  business  and  industrial 
activity  in  America,  and  that  the  volume  of  home-build- 
ing and  the  funds  required  to  finance  home-building  activ- 
ities will  be  considerably  greater  than  was  required  in 
the  years  immediately  preceding  the  war.  If  this  con- 
dition of  affairs  is  realized,  it  will  mean  that  much  greater 
opportunities  for  usefulness  will  be  presented  to  the 
building  associations  of  America  in  future  years  than 
they  have  enjoyed  in  the  years  that  are  passed.  The 
development  in  America  of  industrial,  commercial  and 
manufacturing  activities  will  doubtless  produce  a  greater 
growth  of  towns  and  cities  in  the  next  decade  than  the 
country  has  ever  known  before,  in  a  like  period.  This 
will  mean,  of  course,  a  vast  increase  in  the  volume  of 
home-building. 

The  Federal  Reserve  Banking  System, 

Not  only  will  the  volume  of  business  offered  be 
greatly    increased,    but    there    is    another    serious    con- 

[44] 


THE  RESULTS  ACHIEVED. 

dition  which  will  add  greatly  to  the  work  which 
buiJding  associations  will  be  called  upon  to  perform.  We 
refer  to  the  fact  that  the  savings  banks,  State  banks, 
trust  companies,  and  similar  financial  institutions,  that 
have  heretofore  been  heavy  investors  in  mortgage  secur- 
ities and  have  supplied  a  large  volume  of  funds  required 
for  floating  mortgage  loans,  are  rapidly  being  absorbed 
in  and  affiliated  with  the  Federal  Reserve  Banking  system 
of  the  United  States.  The  expanding  industries  and  com- 
merce of  the  country  require  increased  volume  of  banking 
facilities  to  carry  on  their  business;  and  as  these  saving 
banks  and  similar  institutions  affiliate  with  this  Federal 
Reserve  Bank  system,  and  apply  more  and  more  of  their 
resources  to  the  activities  which  are  opened  up  to  these 
banks  through  the  Federal  Reserve  system,  it  will  result  in 
those  institutions  withdrawing  their  investments  from 
the  field  of  mortgage  loans  and  applying  them  to  more 
profitable  fields  of  short-time  commercial  loans,  which 
are  «JO*«*better  adapted  to  these  organizations. 

The  Future  of  the  BuiJding  Association  Movement, 

Thus  it  appears  that  for  some  years  to  come  building 
associations  will  be  confronted  with  an  increased  demand 
for  the  special  type  of  loans  which  they  are  organized 
to  make,  and  at  the  same  time  will  be  confronted  with 
the  fact  that  the  amount  of  funds  available  in  the  money 
markets  will  be  depleted  by  the  withdrawal  from  that 
type  of  investments,  of  funds  which  have  heretofore 
sought  the  mortgage  loan  market.  This  broadening 
of  the  field  of  opportunity  and  the  heavier  burden  of 
responsibility  placed  upon  building  associations  can  not 
be  evaded  or  ignored.  It  becomes  the  plain  duty  of 
these  institutions  to  accept  the  responsibility  thus  laid 
upon  them,  and  take  steps  to  meet  and  discharge  their 
duties  to  a   much    higher  degree.     They  should  devise 

14.'.  I 


CHAPTER  IV. 

atul  execute  plans  for  increasing  their  membership, 
simphfying  their  plans  and  methods,  adopting  such  new 
features  as  will  attract  to  their  coffers  funds  in  adequate 
volume  to  enable  them  to  meet  the  demands  made  upon 
them  and  which  they  promise  to  perform. 

The  present  membership  of  building  and  loan  asso- 
ciations is  a  very  small  fraction  of  the  number  they 
should  have.  When  the  government  put  War  Savings 
Stamps  upon  the  market,  and  solicited  the  people  to 
invest  therein,  in  less  than  one  year  the  number  of  pur- 
chasers and  investors  in  War  Savings  Stamps  grew  to 
five  times  the  total  membership  of  all  the  building  asso- 
ciations in  America.  Building  associations  should  adopt 
more  aggressive  and  efficient  plans  of  publicity,  and 
should,  with  greater  force,  call  the  attention  of  the  pub- 
lic to  the  merits  of  these  institutions,  as  teachers  of  thrift 
and  aids  to  home-building.  There  should  be  considerable 
increase  in  the  number  as  well  as  in  the  size  of  building 
associations,  and  a  corresponding  expansion  of  the  useful 
service  which  these  institutions  are  rendering.  The  readi- 
ness and  cheerfulness  with  which  the  American  people 
responded  to  the  call  of  their  government  to  purchase 
Liberty  Bonds  and  War  Savings  Stamps  is  ample  proof 
that  the  American  people  are  ready  to  respond  to  an  ap- 
peal for  thrift  and  saving,  and  that  proper  effort  on  the 
part  of  the  building  associations  will  meet  with  a  ready 
response,  and  will  bring  to  these  institutions  a  growth 
and  prosperity  commensurate  with  their  merits.  With 
such  expansion  they  will  be  able  to  do  work  in  transform- 
ing wandering  tenants  into  permanent,  home-owning, 
home-loving,  patriotic  citizens. 


[4G] 


CHAPTER  V. 

Building  Association  Leagues. 

As  building  associations  are  composed  of  a  group  of 
individuals  who  have  combined  to  co-operate  for  their 
mutual  advantage,  it  was  perfectly  natural  that  when  these 
associations  became  numerous  in  any  State  they  should 
bring  the  associations  together  into  a  league.  Such  a 
league  would  logically  adopt  the  same  principle  of  com- 
bination and  co-operation  which  made  the  individual 
associations  successful.  It  was  soon  found  desirable 
that  there  should  be  greater  uniformity  of  methods  in 
the  plans  and  practice  of  the  several  associations,  that 
constant  vigilance  through  such  union  was  required  to 
prevent  injurious  legislation.  These  considerations  led 
to  the  formation  of  so-called  "leagues,"  of  which  local 
associations  form  the  constituent  members.  These 
leagues  give  an  opportunity  for  interchange  of  views, 
and  make  for  harmonious  and  concurrent  action. 

In  England,  where  building  societies,  as  we  have  seen, 
have  long  been  in  existence,  co-operation  among  these 
associations  has  been  established  by  the  .so-called  "Con- 
gress of  Building  Societies."  This  Congress  holds  an- 
nual meetings  at  designated  places,  to  which  delegates 
from  the  respective  local  associations  are  selected  to  repre- 
sent them  in  the  congress.  The  proceedings  issued  by 
this  organization  have  formed  a  very  important  histor- 
ical review  of  the  movement  in  (jreat  Britain.  One  after 
another  the  several  States  in  our  own  country  have 
formed  leagues  of  the  local  associations  within  the  re- 

[-171 


CHAPTER  V. 

spective  States  and  these  State  leagues  finally  combined 
to  organize  "The  United  States  League  of  Local  Build- 
ing and  Loan  Associations." 

Origin  of  Leagues. 

It  is  believed  that  the  first  step  toward  the  organiza- 
tion of  this  United  States  League  was  taken  in  1892, 
at  a  State  convention  of  the  Ohio  Building  Association 
League,  held  at  Toledo,  Ohio.  At  this  convention,  a 
resolution  was  introduced  by  the  author  of  this  work  for 
the  appointment  of  delegates  to  a  convention  of  the 
various  leagues  then  in  existence  in  the  United  States. 
Thereupon  a  committee  was  appointed  to  take  up  the 
matter  with  other  State  leagues,  to  hold  a  preliminary 
meeting,  at  Chicago,  so  that  proper  steps  could  be  taken 
to  organize  the  United  States  League  of  Local  Building 
and  Loan  Associations.  In  this  connection  it  was  also 
advised  to  have  the  work  of  the  associations  brought 
properly  before  the  people  of  the  United  States  and 
other  countries  by  the  holding  of  a  symposium  at  the 
World's  Fair  Congress  in  Chicago,  in  1893. 

In  April  of  that  year  a  preliminary  meeting  was  held  at 
the  Grand  Pacific  Hotel  in  Chicago.  Temporary  officers 
were  elected,  and  these  were  authorized  to  make  an  official 
call  on  the  State  leagues  then  in  existence,  to  become 
affiliated  with  this  organization.  The  first  meeting  was 
held  in  Chicago,  July,  1893.  Since  that  time  the  League 
has  held  regular  meetings  in  various  cities  of  the  United 
States.  The  great  value  of  the  work  that  has  been 
accomplished  by  this  useful  organization  is  not  yet  fully 
recognized.  In  fact,  the  statistical  information  gathered, 
together  with  a  review  of  the  work  accomplished  during 
each  year,  is  properly  brought  before  the  American 
public  through  this  organization. 

[48] 


BUILDING  ASSOCIATION  LEAGUES. 

Organization  of  State  Leagues. 

In  practically  every  Slate  where  the  interests  of  build- 
ing associations  are  important,  leagues  have  been  success- 
fully organized.  These  leagues  hold  annual  conventions, 
to  which  all  associations  are  invited  to  send  delegates. 
It  is  the  usual  custom  to  select  one  or  two  representatives 
from  each  association  as  delegates  to  attend  these  an- 
nual gatherings.  A  program  is  arranged,  with  papers, 
addresses  and  discussions  which  are  carefully  prepared 
and  from  which  the  movement  has  derived  untold  benefit. 
It  is  highly  important  that  all  associations  in  each  State 
should  be  affiliated  with  their  respective  leagues.  The 
value  of  these  league  organizations  is  so  apparent,  and 
the  benefits  derived  from  membership  therein  are  so 
great,  that  in  several  States  the  State  supervisors  of 
these  associations  (to  whom  the  associations  must  make 
their  annual  reports)  have  interested  themselves  in  urg- 
ing every  association  in  the  State  to  become  an  active 
meml)er  of  the  State  league.  The  many  important  mat- 
ters which  are  constantly  arising  and  affecting  the  inter- 
ests of  these  associations,  such  as  new  legislation,  either 
helpful  or  injurious,  judicial  and  court  decisions,  together 
with  the  commercial  aspect  of  these  associations  and  their 
relation  to  the  business  and  industry  of  the  country — all 
demand  the  hearty  co-operation  of  each  local  organiza- 
tion at  all  times.  Through  the  activities  of  these  leagues 
is  founrl  the  best  and  most  practical  channel  through 
which  associations  can  acquaint  themselves  with  modern 
ideas,  new  plans  and  methods. 

International  League. 

The  same  spirit  of  helpful  co-operation  which  led  to 
the  establishment  of  the  State  leagues  and  the  United 
States  League  has  gone  still  further.  Since  these  socie- 
ties,   with    similar   aims,   objects   and   purposes   exist    in 

I'1J>1 


CHAPTER  V. 

practically  every  civilized  nation,  it  was  thought  by  the 
leaders  of  the  movement  in  all  lands  that  much  good 
might  result  from  forming  an  International  League  of 
Building  Societies.  In  191 1,  Dr.  Charles  Pranard,  of 
Paris,  was  the  honored  guest  of  the  United  States  League 
of  Local  Building  and  Loan  Associations,  at  their  con- 
vention in  the  city  of  Grand  Rapids,  Mich.  In  1913,  at 
its  convention  at  Milwaukee,  this  league  entertained  as 
its  honored  guests,  President  Thomas  Whitely  and 
Secretary  Enoch  Hill,  of  the  Halifax  Permanent  Build- 
ing Society,  of  Halifax,  England. 

The  first  steps  toward  the  organization  of  an  Inter- 
national Congress  of  Co-operative  Home  Societies  ap- 
pears again  to  have  been  taken  by  the  Ohio  Building 
Association  League  at  its  annual  meeting,  held  at  Canton, 
Ohio,  in  1910.  At  this  meeting,  upon  the  suggestion 
of  Henry  S.  Rosenthal,  editor  of  The  American  Building 
Association  News,  a  resolution  was  presented  by  Lewis 
L.  Rankin,  "That  a  committee  of  three  be  appointed  by 
the  Chair  to  arrange  for  an  International  Congress  of 
Co-operative  Home  Societies."  This  resolution  was 
adopted,  and  Mr.  Rankin  was  made  chairman  of  the 
committee. 

This  committee  presented  a  similar  resolution  to  the 
United  States  League  of  Local  Building  and  Loan  Asso- 
ciations the  following  year  at  its  annual  meeting  at  Grand 
Rapids,  Michigan,  providing,  "that  a  committee  of  seven 
be  appointed  by  the  president  of  this  League  to  take 
steps  toward  the  organization  of  an  International  Con- 
gress, and  that  the  same  shall  meet  in  London,  Paris,  or 
any  other  European  city  as  may  be  desired,  in  the  year 
19 1 3,  and  on  such  days  as  may  be  found  agreeable  to  all 
concerned."  This  resolution  was  adopted,  the  proposed 
committee  was  appointed  with  Mr.  Rankin  as  chairman. 

[50] 


BUILDING  ASSOCIATION  LEAGUES. 

At  the  annual  convention  of  the  United  States  League, 
held  at  Atlantic  City,  in  July,  1912,  this  committee  re- 
ported progress  and  was  continued  with  authority  to  call 
such  International  Congress  to  meet  in  the  city  of  London. 
At  the  annual  convention  of  the  United  States  League, 
held  at  Milwaukee,  in  19 13,  the  committee  reported  that 
arrangements  had  been  made  to  hold  the  first  Inter- 
national Congress  in  London,  at  the  Hotel  Metropole, 
on  August  nth  and  12th,  19 14,  and  the  following  Janu- 
ary the  formal  call  was  issued. 

At  this  first  Congress  representatives  were  present 
from  the  United  States,  from  England,  Wales,  Ireland, 
South  Africa,  France  and  Norway.  A  corps  of  officers 
were  elected,  with  Lewis  L.  Rankin,  of  Columbus,  Ohio, 
as  president.  A  constitution  and  by-laws  were  adopted, 
providing  among  other  features,  that  the  second  con- 
vention should  be  held  in  19 15  in  the  city  of  San  Fran- 
cisco, California,  and  that  future  meetings  should  be 
held  each  third  year  thereafter.  The  second  meeting  of 
the  International  Congress  was  held  in  1915,  in  the  city 
of  San  Francisco,  California,  being  one  of  the  features 
of  the  Panama  Exposition.  At  this  convention  the  con- 
stitution was  amended  to  provide  that  future  meetings 
should  be  held  at  intervals  of  five  years,  and  according  to 
this  change  the  next  International  Congress  will  be  due 
in  1920, 

County,   City  and  Local  Leagues. 

In  many  communities,  where  there  are  numerous  asso- 
ciations in  existence,  it  is  quite  common  to  form  local 
leagues.  These  organizations  meet  at  regular  intervals, 
and  discuss  problems  affecting  the  interest  and  welfare  of 
their  associations.  In  some  cities,  scheming  building  con- 
tractors and  real  estate  operators  have  sought  to  use 
building  associations  as  a  means  of  advancing  their  per- 


CHAPTER  V. 

sonal  interests,  but  with  co-operation  among  the  building 
associations  in  these  localities,  this  abuse  has  been 
promptly  stopped. 

Many  advantages  may  be  derived  from  these  organi- 
zations. They  have  a  tendency  to  bring  the  interests 
into  a  more  harmonious  co-operation.  Very  strong  local 
organizations  of  this  kind  exist  in  many  of  the  cities 
of  the  country.  The  Metropolitan  League  in  New  York 
City,  the  Hamilton  County  League,  with  headquarters 
at  Cincinnati,  Ohio,  the  Polish  League  of  Building  Asso- 
ciations, and  the  Bohemian  League,  in  the  city  of  Chicago, 
the  Cuyahoga  County  League  of  Building  Associations 
of  Cleveland,  Ohio,  and  many  other  similar  instances 
might  be  given  where  these  local  leagues  have  splendid 
working  organizations,  with  financial,  legislative,  execu- 
tive and  exchange  committees,  selected  from  their  Board 
of  Directors.  The  hearty  co-operation  given  by  these 
local  leagues  to  the  State  and  United  States  League  has 
proved  an  important  factor  in  legislative  as  well  as  other 
matters.  The  Hamilton  County  League  above  referred 
to  may  be  cited  as  an  example  of  what  can  be  accom- 
plished by  active,  efficient  work  of  a  local  league  organi- 
zation. The  efforts  of  this  league  have  been  very  effective 
in  inaugurating  movements  for  helpful  legislation,  and 
in  preventing  the  enactment  of  proposed  laws  that  would 
be  seriously  harmful  to  building  association  interests. 

What  a  League  Can  Do. 

Building  association  leagues  are  organized  for  the  pur- 
pose of  promotion,  publicity  and  protection  of  building 
association  interests. 

( I )  There  are  several  ways  in  which  the  League 
may  promote  the  interests  of  building  associations.  This 
may  be  done  by  initiating  and  urging  the  enactment  of 
helpful  legislation.     Building  associations  are  the  crea- 

152] 


BUILDING  ASSOCIATION  LEAGUES. 

tures  of  statute.  They  can  exercise  only  the  power  con- 
ferred by  law.  They  are  subject  to  all  restrictions  and 
limitations  which  the  law  imposes.  At  the  time  of  their 
origin,  they  were  merely  associations  of  individuals  and 
were  doing  a  line  of  business  and  carrying  on  a  type  of 
activities  unknown  to  the  law  and  unrecognized  by  the 
statute.  As  they  grew  in  number  and  increased  in 
strength,  the  Legislatures  took  cognizance  of  their  ex- 
istence and  enacted  laws  under  which  they  must  be  organ- 
ized and  operated.  In  some  States  these  statute  restric- 
tions were  very  severe,  and  hampered  the  activities  and 
unduly  restricted  their  operations.  Through  the  influ- 
ence of  these  State  leagues  many  of  these  statute  restric- 
tions have  been  relaxed  and  the  powers  and  opportunities 
of  these  associations  have  been  broadened  and  extended. 
As  the  helpfulness  of  these  institutions  to  the  community 
was  demonstrated  and  have  become  recognized.  Legis- 
latures, as  a  rule,  have  been  quite  ready  to  grant  extended 
privileges  to  them  when  properly  advised  of  the  necessity 
for  such  additional  powers  and  privileges. 

In  pursuance  of  this  work  of  the  League,  suggestions 
are  offered  to  the  League  from  associations  in  all  parts 
of  the  State,  and  the  league  committees  representing  the 
whole  building  association  interests  of  the  State  can  con- 
sider these  matters  specifically,  and  arrange  to  have 
them  formulated  in  the  most  desirable  way.  A  delega- 
tion from  a  league  representing  the  building  association 
interests  can  appear  before  the  Legislature  at  short  notice 
at  any  time  and  a  delegation  of  this  character  represent- 
ing the  interests  of  so  many  citizens,  and  of  such  great 
importance,  are  given  far  greater  consideration  by  a 
legislative  c(^mmittee  and  by  the  Legislature  itself  than 
could  possibly  be  commande(l  by  any  individual  or  any 
single  assf)ciatic)n  api)earing  merely  in  its  own  behalf.  In 
the  absence  of  a  league  organization,  matters  of  the  grav- 

|.-i3] 


CHAPTER  V. 

est  importance  pending  before  a  Legislature  are  liable  to 
go  by  default,  and  association  interests  suffer  injury,  be- 
cause in  the  absence  of  a  league  it  is  the  business  of  no 
particular  person  to  represent  these  interests  before  the 
Legislature, 

(2)  A  second  matter  of  very  great  importance  to 
the  associations  is  the  opportunity  which  the  league  meet- 
ings afford  for  the  discussion  of  all  practical  questions 
connected  with  the  management  of  associations.  It  is 
hardly  possible  that  there  could  be  absolute  uniformity 
of  method  in  handling  the  various  details  of  association 
management.  In  some  organizations,  one  phase  of  the 
business  may  be  handled  by  a  better  method  than  in  an- 
other. Delegates  coming  together  for  the  discussion 
of  these  practical  questions  are  certain  to  learn  from 
each  other  many  things  which  will  be  to  the  advantage 
of  their  respective  associations.  In  this  way  their  work 
will  be  simplified,  their  plans  and  methods  made  practical 
and  efficient,  forming  a  means  for  obtaining  information 
and  giving  to  the  best  plans  and  methods  more  publicity. 

(3)  As  a  protective  agency,  league  organizations 
are  of  special  value.  Any  type  of  institution  which  attains 
the  strength  now  enjoyed  by  building  associations,  is  cer- 
tain to  meet  with  more  or  less  antagonism,  and  against 
these  adverse  forces  the  associations  need  protection. 
These  antagonisms  may  arise  in  the  way  of  proposed  leg- 
islation .by  adverse  interests,  wdth  deliberate  intention  to 
injure  the  association.  They  might  arise  from  lack  of 
proper  information  on  the  part  of  the  party  proposing 
the  adverse  legislation.  This  movement  to  injure  asso- 
ciations might  furthermore  gather  momentum  in  the 
course  of  litigation  against  some  local  association.  Novel 
legal  questions  might  arise  in  such  litigation  that  would 
be  of  the  gravest  importance  to  association  interests  and 

[64] 


BUILDING  ASSOCIATION  LEAGUES. 

which  should  be  given  careful  attention  by  the  highest 
type  of  legal  talent  in  order  that  the  decision  arrived 
at  might  be  the  proper  one. 

Some  years  ago,  in  a  Southern  State,  when  building 
association  interests  had  become  quite  important  and 
when  they  had  at  that  time  no  building  association 
league,  a  decision  was  handed  down  against  building 
associations  in  a  case  that  went  practically  by  default, 
and  in  which  the  interests  of  the  associations  were  not 
properly  presented  to  the  court.  The  result  was,  that  this 
improper  decision  handed  down  in  a  case  that  practically 
went  by  default  had  the  result  of  nearly  annihilating  the 
building  association  interests  of  that  State.  Scores  of 
associations  were  put  out  of  business,  and  it  was  nearly 
twenty  years  later  (when  the  same  question  came  up  in 
another  case  before  the  same  court)  on  being  properly 
presented  the  former  decision  was  reversed  and  the  build- 
ing associations  of  that  State  are  only  now  beginning  to 
recover  from  the  harmful  result  of  that  wrongful  decision. 
In  cases  like  this  an  efficiently  organized  and  operating 
building  association  league  would  have  looked  after  that 
case,  would  have  seen  that  it  was  properly  presented  to 
the  court  by  a  competent  lawyer,  and  a  proper  decision 
rendered.  These  are  a  few  of  the  instances  in  which  the 
league  acts  as  a  protective  organization  for  building 
associations. 

League  J^enibershi{t. 

Of  course,  the  work  of  a  league  can  not  be  carried  on 
without  some  expense.  If,  however,  the  League  is  prop- 
erly organized  and  operated,  this  expense  need  not  be 
heavy.  To  meet  the  necessary  outlay,  each  affiliated  asso- 
ciation must  pay  a  small  fee.  The  i)lan  of  apportioning 
these  fees  differs  in  the  different  vStates.  Some  charge 
a  flat  rate  for  all  members.     In  others  they  are  graduated 

[551 


CHAPTER  V. 

according  to  the  assets  of  the  association.  One  of  the 
most  successful  State  leagues  finances  its  operation  by 
making  up  a  budget  and  then  apportioning  it  among  the 
members  at  a  certain  very  low  percentage  of  the  assets 
shown  in  its  last  annual  report.  This  plan  seems  to 
be  eminently  fair,  and  in  practical  operation,  has  been 
found  entirely  satisfactory. 

It  is  highly  important  that  every  association  should 
become  a  member  of  its  State  League.  This  State  or- 
ganization is  charged  with  protecting  the  interests  of  all 
the  associations  in  the  State.  Every  association  is  bene- 
fitted by  the  work  the  State  League  does,  and  it  is 
clearly  inequitable  that  the  non-members  should  receive 
equal  benefits  from  the  League  activities,  and  bear  no 
part  of  the  burden.  In  order  that  the  League  work  may 
be  done  intelligently,  and  in  justice  to  all,  every  asso- 
ciation should  be  represented  in  its  councils.  The  League, 
like  the  individual  association,  is  a  mutual  and  co-opera- 
tive institution,  and  extends  the  same  services,  and  pro- 
duces benefits  to  the  member  associations  similar  to  those 
provided  by  the  respective  associations  for  their  own 
members.  All  associations,  therefore,  should  affiliate 
with  the  League,  so  as  to  make  it  co-operative,  in  fact, 
as  well  as  in  name.  Each  association  should  bear  its 
proper  share  of  the  expense  and  labor  connected  with  the 
work  of  the  League.  It  is  clearly  unfair,  where  there 
are,  say,  three  or  four  hundred  associations  in  a  State, 
for  a  small  group  of  them  to  bear  the  expense  and  labor 
of  looking  after  the  work  of  promotion,  publicity  and 
protection  for  all  the  building  association  interests  in 
the  State.    Co-operation  is  just ;  it  means  power. 

It  should  also  be  borne  in  mind  that,  while  a  league 
is  an  organized  body,  its  work  must  be  done  by  in- 
dividuals. The  personal  expenses  of  delegates  to  the 
League  meetings  are  usually  paid  by  the  association  they 

[56] 


BUILDING  ASSOCIATION  LEAGUES. 

represent.  These  individual  delegates,  however,  must 
lose  time  from  their  own  private  business,  and  incident- 
ally, are  put  to  no  little  inconvenience  and  expense.  This 
is  especially  true  of  officers  of  the  League.  In  view  of 
these  facts,  they  should  certainly  have  the  cordial  and 
unanimous  support  of  the  interests  which  they  represent, 
and  thus,  in  a  measure,  lighten  their  burden,  and  give 
them  such  a  standing  and  prestige  as  will  make  them  far 
more  influential  in  securing  the  ends  for  which  they 
labor. 

The  duty  and  relations  of  the  individual  associations 
to  the  State  League  do  not  end  merely  by  their  becoming 
members  and  paying  annual  dues.  The  work  of  the 
League  and  its  officers  must  have  the  united  support  of  the 
member  associations.  For  example,  it  frequently  occurs 
that  important  legislation  is  pending,  affecting  building 
association  interests,  either  helpfully  or  harmfully.  The 
usual  custom  is  for  the  League  officers  to  call  the  atten- 
tion of  the  member  associations  to  these  matters,  by  a 
circular  letter,  requesting  each  association  to  inform 
their  local  legislators  regarding  merits  or  evils  of  the 
pending  legislation.  These  circular  letters  should  not  be 
ignored  and  throzvn  into  the  zvaste-baskct.  The  officers 
and  members  of  the  local  associations  should  back  up  the 
efforts  of  the  officers  of  their  leagues  by  personal  inter- 
views or  personal  letters  to  their  legislators  regarding 
the  pending  measures.  The  result  of  efforts  of  this  kind 
is  always  helpful  and  beneficial.  Legislators,  as  a  rule, 
are  actuated  by  the  highest  motives  and  ordinarily  en- 
deavor to  enact  such  laws  as  will  be  beneficial  to  their 
constituents.  Where  evil  or  harmful  legislation  is 
enacted,  it  is  seldom  done  by  the  deliberate  intent  of  the 
legislators,  but  more  frequently  results  from  misconcep- 
tion, misunderstanding  or  lack  of  full  knowledge  regard- 
ing the  merits  of  the  pending   legislation. 

[57] 


CHAPTER  V. 

Building  association  officers,  who  are  actively  engaged 
in  the  practical  conduct  of  these  institutions,  are  better 
informed  and  far  more  familiar  with  the  needs  of  these 
institutions  and  what  measures  would  be  beneficial  or 
harmful  to  them  than  the  average  legislator.  It  is  not 
only  the  plain  duty  of  these  association  ofificers  to  give  to 
these  representatives  the  benefit  of  their  knowledge  and 
experience,  but  such  action  on  their  part,  as  a  rule,  is 
gladly  welcomed  by  these  representatives,  and  is  given 
full  and  careful  consideration. 

The  Press. 

The  greatest  benefit  occurring  from  the  various  meet- 
ings of  the  League  is  the  publicity  which  the  building 
associations  receive  from  the  publication  of  their  pro- 
ceedings. The  public  press  is  usually  willing  to  give 
wide-spread  publicity  to  their  work,  and  at  each  of  these 
League  meetings  it  is  highly  important  that  the  repre- 
sentatives of  the  press  be  aided  and  assisted  by  the  offi- 
cers and  delegates  in  getting  full  and  accurate  stories 
of  the  proceedings.  Many  of  the  papers  and  addresses 
presented  at  these  league  meetings  are  published  in  full 
by  the  local  press,  and  the  result  is  that  the  general  public 
gets  full  information  in  this  way  regarding  the  merits 
and  benefits  arising  from  building  association  activities. 
The  publicity  thus  given  the  building  association  move- 
ment has  doubtless  been  a  very  strong  factor  in  its  growth 
and  development. 


[58] 


CHAPTER  VI. 

Legislation  and  Taxation. 

Building  associations,  in  their  original  form,  were 
merely  voluntary  associations  of  small  neighborhood 
groups  of  individuals,  and  were  not  incorporated.  The 
advantages  derived  by  their  members  soon  became  so 
apparent  as  to  result  in  the  formation  of  many  societies, 
for  similar  purposes.  Many  of  these  grew  in  number 
and  in  strength  and  broadened  their  field  of  activities 
until  their  membership  was  not  confined  to  the  little  nar- 
row community  in  which  it  first  originated.  The  larger 
scope  of  activity  obviously  require  judicious  legislation 
regulating  the  organization  and  the  plans  and  methods  of 
their  operation. 

It  will  readily  be  admitted  that  no  institution  should 
be  permitted  to  hold  itself  out  as  a  depository  to  receive 
and  invest  the  funds  of  the  public  or  of  those  citizens 
who  desire  to  take  advantage  of  its  facilities,  except 
as  such  organization  is  subject  to  legislative  control.  It 
is  believed  that  Pennsylvania  was  the  first  State  to  pass 
laws  regulating  the  organization  and  operation  of  build- 
ing associations.  This  first  statute  was  passed  in  1850, 
and  was  shortly  followefl  by  enactments  along  the  same 
lines  by  the  legislatures  of  other  States.  Similar  legisla- 
tion has  been  made  from  time  to  time  as  experience  has 
disclosed  the  need. 

Vast  interests  of  individuals  and  of  the  State  are 
involved  in  the  operation  of  these  associations.  Where 
they    have   become   numerous   and   great    resources   are 

(591 


CHAPTER  Vl. 

entrusted  to  their  care,  they  become  closely  identified 
with  tiie  moral  and  material  welfare  of  communities. 
It  is  of  the  highest  importance,  therefore,  that  with 
such  an  interest  at  stake,  their  rights,  duties,  priv- 
ileges and  immunities  should  be  clearly  defined  by  statute, 
and  that  the  individual  rights,  duties  and  privileges  of 
members  should  be  carefully  guarded  and  specifically  de- 
fined. 

Legislative  bodies  are  made  uj)  of  representatives 
chosen  from  various  sections  of  the  State,  identified  with 
various  industrial  and  financial  interests  and  often  hold- 
ing diverse  views  and  opinions,  and,  as  it  has  often 
occurred  with  little  or  no  knowledge  of  or  experience 
in  building  association  afifairs.  It  is  legislative  bodies 
thus  constituted  that  have  proposed  and  enacted  legis- 
lation governing  building  associations,  some  of  which 
has  been  helpful,  some  others  detrimental. 

Many  useful  and  conservative  laws  have  been  enacted, 
and  the  interests  of  the  associations  have  been  promoted 
thereby.  On  the  other  hand,  there  has  been  no  little 
patchwork  and  superficial  legislation,  which  has  some- 
times proved  detrimental  to  the  cause  it  was  intended 
to  benefit.  With  the  growing  popularity  of  these  asso- 
ciations, some  of  our  statesmen,  with  a  laudable  ambition 
to  originate  laws,  have  proposed,  and  in  some  cases 
secured  the  enactment  of  measures  that  were  unwise  and 
impracticable..  The  time  has  now  arrived,  however,  when 
the  members  elected  to  the  various  Legislatures,  and  to 
Congress,  are  becoming  better  informed  as  to  the  real 
nature  and  function  of  these  associations. 

The  establishment  of  the  United  States,  State  and 
Local  League,  has  created  an  authoritative  body  which 
can  present  to  lawmakers  in  a  formal,  representative  and 
influential  way  the  new  legislation  which  is  needed  and 
can  point  out  the  dangers  of  harmful  measures  when  they 

[60] 


LEGISLATION  AND  TAXATION. 

are  proposed.  Legislators  are  growing  wiser  and  better 
informed  on  this  important  subject.  If  an  improper 
measure  is  now  introduced  into  any  Legislature,  there 
are  faithful  and  intelligent  guardians  of  these  institutions 
either  within  the  Legislature  or  without,  who  will  quickly 
turn  on  the  light  and  reveal  the  measure  in  its  true  aspect. 

Legislation  in  England. 

The  success  of  the  Greenwich  Union  Building  Society 
.and  of  other  early  organizations  of  the  kind  in  England, 
soon  attracted  the  attention  of  the  government.  So  im- 
portant was  the  movement  considered,  as  indicated  by 
the  activity  of  these  organizations,  that  in  the  year  1836 
an  Act  of  Parliament  was  passed,  giving  building  asso- 
ciations their  first  legal  recognition,  providing  ample 
opportunities  and  inducements  for  their  formation,  and 
making  full  provision  for  the  protection  of  their  mem- 
bers. English  societies  existed  under  this  act  until  1874, 
when  a  new  act,  very  liberal  and  elaborate  in  its  provisions, 
was  passed, 

Proinsions  of  the  English  Law. 

The  English  law,  upon  which  our  own  associations 
apparently  are  founded,  contains  a  number  of  interesting 
provisions.  It  declares  that  any  number  of  per.sons  may 
establish  a  society,  either  terminating  or  permanent,  for 
the  purpose  of  raising  subscriptions,  to  be  used  as  loans 
to  the  .society  members.  Such  loans  mu.st  be  protected 
by  members  out  of  the  funds  of  the  society  by  security  on 
freehold,  copyhold,  or  leasehold  estate  by  way  of  mort- 
gage. Any  society  under  the  act  shall  have  power  to 
liold  land,  with  right  of  foreclosure,  and  may  from  time 
to  time  raise  funds  by  ihe  issue  of  shares  of  one  or  more 
denominations,  paid  either  by  periodical  or  other  sub- 
scriptions,  and    with   or   without    accumulating   interest. 

f<;ii 


CHAPTER  VI. 

Sucli  funds  may  be  repaitl  when  no  longer  required  for 
the  purpose  of  the  society.  Societies,  furthermore,  are 
empowered  to  receive  deposits  or  loans  from  members, 
or  other  persons,  corporate  bodies,  joint  stock  companies, 
or  terminating  building-  societies. 

Societies  established  under  or  adopting  the  act  of  1874 
are  bodies  corporate,  having  perpetual  succession  and  a 
common  seal,  thus  dispensing  with  the  cumbrous  and 
inconvenient  S)'Stem  of  trusteeship.  The  rules  must 
specify  the  society's  name  and  place  of  meeting,  terms  of 
withdrawal  and  repayment,  manner  of  alteration  of  rules, 
the  appointment,  renumeration  and  removal  of  officers, 
provisions  as  to  general  and  special  meetings,  and  the 
settlement  of  disputes,  custody  of  seal,  mortgage  deeds 
and  securities,  powers  of  directors  and  other  officers,  fines 
and  modes  of  dissolution.  Societies  may  unite  with 
others.  One  society  may  transfer  its  engagements  to 
another.  They  may  purchase,  build  or  hire,  or  take  on 
lease,  any  building  for  conducting  their  business.  Minors 
may  be  members,  but  cannot  vote  or  hold  office  during 
non-age.  Accounts  are  to  be  furnished  to  members 
annually.  The  societies  are  exempt  from  stamp  duties, 
except  those  upon  mortgages.  Receipts  endorsed  upon 
mortgages  are  sufficient  discharge  without  conveyance. 

The  law  of  1836  provided  for  the  appointment  of  a 
special  board  of  commissioners  to  superintend  the  work 
of  the  Loan  Fund  Societies  of  Ireland.  This  was  called 
the  Loan  Fund  Board.  All  societies  had  to  register  with 
and  report  to  this  board,  whose  duty  it  was  to  see  that 
the  societies  conducted  their  affairs  according  to  the 
provisions  of  the  new  law. 

Defects  in  the  English  Law, 

Upon  analysis  it  will  be  found  that  the  English  acts 
governing  building  societies  are  not  philosophical  and 

[621 


LEGISLATION  AND  TAXATION. 

harmonious  in  their  construction.  They  were  rather 
spontaneous  and  sporadic  in  their  origin,  springing  up 
from  time  to  time  out  of  necessity,  or  to  meet  some  special 
interest.  It  would  not  be  in  place  here  to  attempt  an 
analysis  of  the  English  statutes,  and  to  ix)int  out  their 
contradictory  and  inharmonious  provisions.  It  will  be 
sufficient  to  quote  a  passage  from  the  masterly  work* 
of  an  English  writer,  Mr.  Henry  F.  A.  Davis.  He  says : 
"This  (act)  lias  been  unfavorably  noticed  by  some  learned 
judge,  who  has  had  to  decide  a  question  arising  under  it. 
A  piece  of  legislation  more  resembling  patch-work  would 
be  difficult  to  find  anywhere.  Two  acts  of  parliament, 
originally  intended  to  regulate  associations  having  yery 
different  objects  in  view  from  those  contemplated  by 
building  societies — and  having,  as  a  writer  in  the  Jurist 
once  observed,  internal  evidence  of  their  having  been 
passed  during  the  chaos  of  a  legislative  convulsion — 
badly  conceived  and  badly  executed,  were  by  a  third  act, 
if  possible  more  clumsy  than  either,  incorporated  so  as  to 
form  the  code  which  was  to  govern  building  societies." 

Laws  m  the  United  States. 

The  history  of  associations  in  the  United  States,  as 
we  have  already,  noted,  is  still  young.  The  associa- 
tions, which  appeared  slowly  at  first,  were  organized, 
partly  as  unincorporated  voluntary  associations,  and 
partly  under  charters  obtained  under  the  general  acts  of 
several  of  the  States  authorizing  the  incorporation  of 
beneficial  and  other  such  associations.  The  rapid  de- 
velopment of  the  country  led  to  a  like  rapid  development 
of  building  associations,  so  that  legislation  soon  became 
imperative. 

During  the  years  from  1H50  to  iH()<),  most  of  the  older 
States  endeavored  by  legislation  to  regulate  the  formation, 

•  The  Law  of  BuildinK  and  Fr'-i-  Mold  I.M-incl  Societies,  .Td  edition,  H.  Sweet 
It  SoTiF,  London,   KnKland. 

1631 


CHAPTER  VI. 

powers  and  management  of  l)uil(ling^  associations.  Since, 
i860  the  tiewer  Slates  have  taken  up  the  subject.  At  the 
present  time,  in  nearly  all  the  Stales  and  territories,  there 
is  some  statutory  pnnision  for  the  government  of  asso- 
ciations. Building  associations  are,  as  a  rule,  recognized 
in  the  laws  of  the  different  States  as  a  class  of  corpora- 
tion in  many  respects  widely  different  from  any  other 
type  of  corporation ;  different  in  their  plans,  organiza- 
tion, method  of  operation,  as  well  as  in  the  aims  and 
purposes  for  which  they  are  organized,  and  in  the  results 
which  follow  their  activities. 

The  law-making  powers  in  most  of  the  States  have 
recognized  the  fact  that  these  institutions  are  not  organ- 
ized or  operated  as  money-making  institutions,  or  for 
the  purpose  of  acquiring  unusual  profits,  or  for  exploit- 
ing the  public  for  the  benefit  or  advantage  of  a  few  in- 
dividuals. The  mutual  and  co-operative  plan  on  which 
they  are  organized  and  conducted  restricts  their  operation 
to  their  own  members,  and  the  fair  and  equitable  distri- 
bution of  the  benefits  resulting  from  their  operation 
among  the  members  on  fair  and  even  terms,  makes  a  dis- 
tinct line  of  cleavage,  which  differentiates  these  institu- 
tions from  any  other  type  of  corporation.  The  work  of 
these  institutions  in  teaching  thrift,  and  aiding  its  mem- 
bers to  practice  habits  of  saving  and  frugality,  has  done 
incalculable  good  in  elevating  the  character,  improving  the 
habits  and  enhancing  the  prosperity  of  a  vast  number 
of  our  people.  The  practical  application  of  the  resources 
of  these  institutions  to  the  building  of  homes  and  aiding 
its  membership  to  change  their  condition  from  rent- 
paying  tenants  to  home-owning  citizens,  has  been  recog- 
nized as  a  work  of  vital  importance  and  of  the  highest 
helpfulness  to  the  interests  of  the  State  and  Nation. 

All  these  considerations  have  led  legislative  bodies 
and  the  law-making  powers  to  recognize  these  institutions 

[64] 


LEGISLATION  AND  TAXATION. 

as  a  vital  force  for  good  in  the  economic  life  of  our 
people.  It  has  resulted  in  causing  our  legislators  to  re- 
gard these  institutions  in  high  favor,  and  to  accord  to 
them  a  just  recognition  of  the  benefits  they  confer  upon 
the  public  and  upon  society.  Some  of  the  early  legisla- 
tion connected  with  these  institutions  may  be  classed  as 
having  been  adopted  by  legislators  ignorant  of  and  inex- 
perienced in  the  subject;  and  with  no  adequate  precedent 
for  their  guidance.  But  of  late  years  the  subject  has  re- 
ceived more  intelligent  attention  by  the  law-making 
powers  and  many  legislators  have  given  much  study  to 
the  various  problems  connected  with  it. 

Improved  Legislation. 

In  the  two  decades,  between  1880  and  1900  the  vari- 
ous State  leagues  have  taken  aggressive  steps  in  the 
matter  of  securing  proper  legislation.  Most  of  these 
leagues  have  appointed  committees  on  legislation,  which 
have  drafted  laws  regulating  them,  and  submitted  their 
plans  to  the  various  State  Legislatures.  In  most  in- 
stances these  measures  thus  proposed  by  the  various 
leagues  have  been  accepted  and  adopted  by  the  several 
legislatures  in  substantially  the  form  which  the  league 
committee  proposed.  These  successful  results  have  only 
been  achieved  by  the  policy  established  in  practically 
every  league  organization  of  proposing  only  such  legis- 
lative enactments  as  were  fair,  proper  and  equitable,  not 
only  to  the  building  associations,  but  to  the  State  and 
public.  In  no  other  way  could  such  favorable  results 
have  been  attained.  The  future  success  and  prosperity 
of  the  builcling  associations  depends  upon  adherence  to 
this  policy  whenever  legislative  action  is  required  by  the 
league,  or  pending  legislation  is  either  favored  or 
opposed. 

[651 


CHAPTER  VI. 

As  an  example  of  what  can  be  achieved  by  the  united 
co-operation  of  a  State  League,  the  experience  of  the 
State  of  Ohio  may  be  cited.  In  1890  the  convention  of 
the  Ohio  Building  Association  League  unanimously 
adopted  a  motion  instructing  the  legislative  committee 
to  codify  the  existing  laws  relating  to  building  associa- 
tions, embodying  therein  such  changes,  amendments  and 
additions  as  might  be  deemed  necessary.  After  this  com- 
mittee had  carefully  prepared  this  measure  it  was  sub- 
mitted in  printed  form  to  the  associations  of  Ohio  for 
suggestions,  which  were  fully  discussed  by  the  com- 
mittee. Finally,  and  after  many  modifications,  the  code 
was  submitted  to  the  Legislature  for  adoption.  As  a 
result  of  the  combined  interests  of  the  building  associa- 
tions of  the  entire  State,  requesting  this  legislation,  the 
Legislature  gave  the  measure  very  careful  attention,  and 
after  long  and  thorough  discussion,  this  bill,  called  the 
Corcoran  Act,  was  passed  in  May,  1891. 

This  bill  had  been  so  carefully  drawn,  so  thoroughly 
revised,  and  given  such  efficient  attention  by  the  Legis- 
lature that  for  the  ensuing  period  of  seventeen  years 
there  was  no  change  or  amendment  made  to  this  law. 
The  legislative  committee  of  the  Ohio  Building  Asso- 
ciation League  opposed  every  suggestion  made  to  change 
or  amend  it  during  that  period.  Under  the  provisions  of 
this  law  the  building  associations  of  Ohio  prospered 
greatly  and  increased  their  assets  more  than  300  per 
cent,  in  the  succeeding  nineteen  years. 

It  was  not  until  1908  that  the  Ohio  League,  meeting 
at  Youngstown,  passed  a  resolution  instructing  its  legis- 
lative committee  to  draft  and  ask  the  enactment  of  certain 
amendments  to  the  law,  which  had  become  desirable  on 
account  of  the  increased  growth  and  the  expanding  needs 
and  improved  plans  and  methods  of  operation.  In  1909 
this  amended  measure  having  been  prepared  in  much  the 

[66] 


LEGISLATION  AND  TAXATION. 

same"  fashion  as  above  described,  was  brought  before 
the  Ohio  Legislature,  approved  by  that  body,  and 
enacted  as  the  Russell  Act. 

This  outHne  of  the  plan  and  methods  followed  by  the 
State  of  Ohio  practically  describes  the  steps  taken  in 
numerous  States  in  which  building  associations'  interests 
are  important  and  which  have  active  and  efficient  build- 
ing association  leagues.  Many  of  the  provisions  found 
in  these  Ohio  enactments  have  been  adopted  with  little 
modification  in  numerous  other  States.  In  every  case 
they  have  resulted  in  stimulating  the  growth  and  increas- 
ing the  prosperity  of  building  association  interests. 

The  great  good  that  has  been  accomplished  by  the 
Illinois  State  League  is  a  matter  of  history. 

Litigation. 

Not  only  has  the  legislation  under  which  associations 
are  organized  and  operated  oftentimes  been  crude  and 
imperfect,  but  the  associations  themselves,  in  many  cases, 
have  been  organized  by  persons  without  experience  and 
lacking  information  in  such  matters.  It  has  resulted, 
therefore,  that  through  crude  legislation  on  one  hand 
and  crude  organization  and  efficient  operation  on  the 
other,  many  associations  have  not  reached  the  high  suc- 
cess which  was  anticipated.  As  a  natural  result  in  most 
of  the  States  litigation  has  occurred.  With  the  enact- 
ment of  wiser  laws  and  the  very  marked  improvement 
in  the  character  and  ability  of  the  officers  which  have 
been  enlisted  to  operate  these  local  associations,  there 
has  been  a  wonderful  improvement  along  these  lines. 

It  would  be  foreign  to  the  character  and  purpose  of 
this  work  to  undertake  to  give  a  resume  of  the  laws  of 
the  different  States  in  reference  to  these  associations,  or 
to  give  digests  of  the  cases  arising  under  these  laws  and 
of  the  decisions  that  have  been  rendered  in  the  different 

107  J 


CHAPTER  VI. 

courts.  Such  matters  belong  more  properly  to  a  work 
of  a  legal  than  a  popular  character.  Members  and  offi- 
cers of  associations  should  look  to  their  regular  legal 
advisors  for  information  and  instructions  upon  all  mooted 
or  doubtful  questions  of  a  legal  character  which  might 
arise. 

Exemption  from  Taxation. 

The  useful  work  done  by  building  and  loan  associa- 
tions and  especially  their  aid  and  assistance  in  the  build- 
ing of  homes  and  the  creation  of  permanent,  tax-paying 
wealth,  has  led  many  of  the  States,  where  their  constitu- 
tions permitted  it  to  be  done,  to  exempt  these  institutions, 
their  mortgages  and  investments  from  all  forms  of  State 
and  municipal  taxation.  Many  of  the  States  also  en- 
courage their  citizens  to  invest  in  these  institutions,  by 
providing  that  the  shares  held  by  individuals  in  these 
institutions  shall  not  be  taxed. 

There  are  most  excellent  reasons  to  support  this  policy. 
The  funds  invested  in  building  associations  by  these 
individual  members  are  not  a  permanent  investment,  and 
are  subject  to  withdrawal  either  on  demand  or  on  a  com- 
paratively short  notice.  The  result  would  certainly  be 
that  levying  a  burdensome  tax  on  investments  of  this  char- 
acter would  encourage  their  withdrawal,  and  in  that 
event  the  State  would  be  deprived  of  the  slight  revenue 
which  it  sought  from  that  source.  On  the  other  hand, 
the  investments  made  by  building  associations  in  aiding 
in  the  building  of  homes  results  in  the  creation  of  per- 
manent additions  to  the  taxable  property  of  the  com- 
munity, every  one  of  which  will  forever  after  bear  its 
share  of  the  public  burdens. 

It  is  a  realization  of  this  fact  that  has  led  the  law- 
making bodies  of  many  States  to  encourage  the  organi- 
zation and  operation  of  building  associations  by  exempt- 

168] 


LEGISLATION  AND  TAXATION. 

ing  the  property  of  the  building  association,  and  ex- 
empting the  money  invested  therein  belonging  to  the 
members  from  all  forms  of  taxation,  the  result  being  to 
stimulate  the  building  of  homes,  thus  bringing  to  the 
public  treasury  a  continuing  stream  of  revenue  from  the 
taxation  of  the  homes  thus  created. 

Forceful  Arguments  by  Hon.  Julius  Stern. 

An  exceedingly  logical  and  forceful  argument  in  favor 
of  this  policy  was  presented  in  a  paper  before  the  United 
States  League  by  the  Hon.  Julius  Stern,  of  Chicago.  The 
arguments  used  by  him  in  this  paper  are  so  convincing  and 
are  of  such  plain  value  that  we  reproduce  them  as  follows : 
"Nevertheless  exemption  laws  in  matters  of  taxation 
will,  on  examination,  be  found  to  be  as  old  as  the  laws 
imposing  taxes  themselves,  and  we  will  find  that  there 
has  been  no  time  when  exemption  from  the  imposition  of 
fiscal  burdens  was  not  practiced  and  favored  under  the 
written  laws  and  possibly  the  unwritten  ones  which  pre- 
ceded them.  An  inquiry  as  to  the  propriety  of  exemptions 
in  general,  must  therefore  be  narrowed  down  to  an  in- 
quiry into  the  proper  selection  of  the  matters  and  things 
to  be  exempted  from  taxation,  and  as  to  the  forms  of 
property  the  exemption  of  which  from  taxation  will  be 
most  conducive  to  the  advancement,  and  conservation  of 
the  government  by  the  greater  progress  in  wealth,  sta- 
bility, and  sustaining  power  of  the  people,  which  would 
naturally  follow  from  such  exemptions. 

"It  has  been  the  practice  of  American  governments, 
both  State  and  municipal,  to  embody  in  their  constitu- 
tions and  statutes,  laws  exempting  property  devoted  to 
charitable  and  educational  uses  from  taxation,  on  the 
theory  that  whatever  advanced  the  education  of  the  peo- 
ple conduced  to  their  greater  progress  and  wealth-pro- 
ducing power,  and  that  whatever  was  devoted  to  char- 

[69] 


CHAPTER  VI. 

itable  uses  should  escape  the  exactions  of  the  tax  gatherer, 
because  it  was  not  productive  of  income  to  those  who  ex- 
pended the  money,  and  possibly  also  because  of  the 
moral  sentiment  before  alluded  to. 

"It  must  be  conceded,  however,  that  it  is  good  eco- 
nomic as  well  as  good  morals,  and  free  from  any  taint  of 
dubious  experiment,  for  any  government  to  foster  home- 
owning  and  thrift,  that  at  all  times  and  in  all  places, 
these  form  the  basis  for  a  better  mode  of  living  and 
ever-growing  expenditures  on  material  things  which,  in 
themselves,  are  taxed  by  the  government ;  while  on  the 
other  hand,  among  the  most  mischievous  forms  of  tax- 
ation that  can  be  devised  are  such  as  place  skill,  industry 
and  frugality  at  a  disadvantage  in  the  struggle  for  exis- 
tence. Again,  the  policy  of  exempting  certain  industries 
for  limited  periods,  or  for  all  time,  in  order  to  foster 
their  growth  as  a  source  of  future  strength  to  the  govern- 
ment by  way  of  providing  a  fruitful  field  for  future  tax- 
ation, indirect  or  direct,  has  been  practiced  both  by 
the  National  and  State  governments ;  and  where  put  into 
execution  with  proper  forethought,  and  surrounded  with 
necessary  safeguards,  has  been  productive  of  satisfactory 
results. 

"All  taxation  to  be  just  should  be  imposed  so  that 
every  species  of  property  in  proportion  to  its  value  be 
made  to  bear  its  due  and  equal  shares  of  the  burden ;  yet, 
if  it  be  perceived  that  by  maintaining  its  weight  in  cer- 
tain directions  for  a  time,  or  by  excluding  here  and  there 
the  burden  altogether,  an  economic  result  is  achieved 
which  will  yield  greatly  increased  returns  in  the  future 
from  the  aggregate  taxables,  then  it  is  the  part  of  wis- 
dom in  that  behalf  to  so  minimize  or  exclude, — that  is, 
exempt  from  taxation. 

"For  instance,  to  encourage  commercial  enterprises 
and  exchanges  governments  have  often  found  it  expe- 

[70J 


LEGISLATION  AND  TAXATION. 

dient  and  profitable  to  exempt  from  taxation  the  shipping 
necessary  to  carry  on  these  enterprises,  and  not  only 
abroad,  but  at  home  do  we  find  this  to  be  the  practice.  In 
Great  Britain,  Germany,  and  France,  the  earnings  only  of 
ships  are  taxed; — not  the  capital  invested.  In  Austria 
recently  all  taxes  on  vessels  engaged  in  foreign  trade 
were  suspended  for  five  years,  in  order  that  this  industry 
might  be  built  up  and  become  sufficiently  strong  and  rich 
to  afford  a  remunerative  harvest  at  the  end  of  such  term. 
Delaware  exempts  shipping  from  all  taxation.  New 
York  and  Alabama  exempt  their  shipping  in  the  foreign 
trade  from  all  taxation;  Massachusetts,  New  Hampshire 
and  Connecticut  tax  the  earnings  only  of  their  shipping 
in  foreign  trade,  and  under  the  decision  of  the  United 
States  Supreme  Court,  Pennsylvania  imposes  no  taxes 
on  its  shipping  in  interstate  or  foreign  trade.  The  heavy 
taxes  levied  for  limited  periods  on  the  importation  of 
certain  foreign  goods  for  the  protection  of  infant  indus- 
tries at  home  seek  their  justification  and  excuse  on  this 
same  line  of  thought ;  and  the  wisdom  or  unwisdom  of 
their  imposition  from  the  point  of  view  of  economics 
simply,  must  abide  the  outcome  of  the  experiment.  All 
exemptions  from  taxation  are  based  on  considerations  of 
public  policy; — the  highest  public  policy  is  that  which 
sacrifices  a  present  given  measure  of  good  results  for  a 
future  increased  measure. 

"Whenever  governments  can  aid  directly  or  indirectly 
in  so  increasing  the  future  measure,  it  becomes  not  only 
good  policy  but  a  duty  imposed  upon  the  directing  power 
to  afford  such  aid. 

"In  the  case  of  the  local  loan  and  building  associations, 
the  only  aid  that  need  be  asked  under  this  head,  is  of  a 
passive  nature.  No  direct  action  of  any  kind  is  required, 
it  is  but  necessary  that  they  be  shielded  against  improper 
impositions,  and  be  allowed  to  work  out  their  own  salva- 

171] 


chapti:r  \'i. 

tiun.  As  corporate  entities,  they  need  cxonption  from 
tckvation, — because  the  pruporty  vvhicli  stands  for  and  as 
their  assets,  already  pays  its  just  and  equitable  share 
lo  the  governtncnt  for  the  protection  it  receives  there- 
from in  the  shape  of  taxes  paid  by  the  individual  share- 
holders ; — and  because  as  corporations  purely  co-opera- 
tive in  their  nature  they  cannot  afford  to  pay  what  would 
l)e  in  effect  a  double  taxation,  without  so  far  impairing 
their  strength  as  to  endanger  their  existence  and  destroy 
their  usefulness. 

"As  corporate  entities  their  exemption  from  taxation 
is  justified,  because  to  a  far  greater  degree  than  the 
charitable  and  educational  institutions  quoted  above  as 
being  so  generally  exempted,  do  they  tend  to  advance  the 
education  of  the  people,  and  conduce  to  their  greater 
progress  and  wealth-producing  power ;  and  to  a  greater 
degree  than  either  of  the  others  are  they  entitled  to  the 
support  of  that  healthy  moral  sentiment,  which  finds  in 
home-ownership  the  mainstay  of  enlightened  good 
citizenship,  and  in  enlightened  good  citizenship  the  only 
safeguard  of  our  continued  existence  as  a  nation. 

"Again  on  the  theory  that  it  is  proper  and  far-sighted 
economic  policy  for  the  State  to  encourage  and  foster 
the  growth  of  institutions'  which  will  create  new  wealth 
for  its  future  support,  the  exemption  of  the  local  build- 
ing and  loan  associations  from  taxation,  is  amply 
justified. 

"Among  other  things  it  is  stated :  'It  cannot  be  fairly 
claimed  that  the  bonds  and  mortgages  of  a  building  and 
loan  association  are  property  of  a  taxable  nature,  or  are 
possessed  of  value  in  the  sense  had  in  mind  by  the 
framers  of  the  constitution  of  this  State  by  the  phrase, 
'subject  to  taxation,'  because  they  have  no  exchangeable 
value  whatever,  as  they  are  absolutely  non-negotiable; 
not  having  been  given  by  one  individual  to  another,  in 

[72] 


LEGISLATION  AND  TAXATION. 

exchange  for  any  articles  of  value  advanced  thereon, 
but  being  merely  written  promises  by  one  member  of  a 
class  of  co-operators  to  the  other  members  of  the  same 
class  that  will  continue  to  co-operate  with  them,  in  ac- 
cordance with  the  agreement  then  or  at  some  antecedent 
date  entered  into  by  all  of  them,  until  by  the  result  of  their 
joint  operation,  certain  ends  of  like  usefulness  to  all  of 
them  shall  have  been  attained.  This  promise  being  only 
one  of  a  mutual  set  of  promises  between  all  the  members 
of  that  class,  is  not  of  such  nature  that  it  can  be  assigned 
or  transferred  to  an  outsider  for  value,  by  either  of  the 
parties  thereto,  so  as  to  change  it  into  a  promise  of  the 
repayment  of  a  certain  sum  of  money  advanced  on  its 
strength,  in  a  different  manner;  i.  e.,  the  repayment  in 
bulk  of  the  total  moneys  advanced  to  the  borrowing 
stockholder,  after  the  manner  of  ordinary  notes  and 
mortgages.  //  building  association  could  not  place  its 
entire  collection  of  bonds  and  mortgages  upon  the  market, 
and  realize  a  single  dollar  by  the  sale  thereof;  it  cannot 
assign  them ;  it  cannot  dispose  of  them  in  any  way.  They 
represent,  in  such  transaction,  a  mere  agreement  between 
two  sets  of  stockholders  or  between  the  borrowing  stock- 
holder in  the  particular  transaction  and  itself  (i.  e.,  the 
aggregation  of  all  the  stockholders),  to  the  effect,  not 
that  the  borrowing  stockholder  will,  at  any  one  time,  pay 
the  amount  stipulated  in  the  said  bond,  but  that  he  will 
pay  to  his  co-stockholders,  being  the  loan  and  building 
association,  a  certain  stipulated  amount  per  week  or 
month,  as  installments  on  his  own  shares  of  stock  with 
interest,  etc.,  for  the  advancement  of  money  to  him 
thereon,  and  that  he  will  continue  such  payments,  until 
the  value  of  each  share  of  stock  in  the  series  held  by  him, 
reaches  par ;  and  that  he  is  to  receive  a  release  of  the 
mortgage  by  him  given  U)  the  association,  as  an  earnest 
of  the  performance  by  him  of  the  condition  of  his  bond. 

[73] 


CHAPTER  VI. 

"And  aij^ain.  'property'  is  defined  hy  Bouvier  to  be  'an 
exclusive  right  of  things;  a  right  to  dispose  of  them, 
either  by  exchanging  them  for  other  things  or  by  giving 
them  away  to  any  other  person  without  consideration,  or 
even  throwing  them  away' ;  thus  showing  that  the  defini- 
tion of  the  legal  text  writer,  as  to  the  essence  of  the 
value,  accords  in  all  things  with  that  laid  down  by  the 
political  economists.  To  go  one  step  farther,  'valuable 
property'  would  be  defined  to  be  such  property  as  one 
could,  under  ordinary  circumstances,  dispose  of  for  a  valu- 
able consideration.  The  bonds  and  mortgages  of  a  build- 
ing and  loan  association  are  not  property  of  such  a  char- 
acter; as  before  stated,  they  are  absolutely  valueless,  ex- 
cept to  the  association  itself,  and  to  that,  merely  as  an 
evidence  of  the  advances  made  to  one  of  its  stockholders 
on  his  stock,  and  a  means  of  compelling  him  to  continue 
payment  of  installments  thereon  in  like  manner  as  his 
brother  stockholders,  to  whom  no  advances  have  as  yet 
been  made;  under  penalty  of  being  compelled  to  make 
good  such  payments  out  of  the  real  estate,  the  title  to 
which  has  been  transferred  as  a  security  for  the  perform- 
ance of  the  promise,  reduced  to  writing  in  said  bond, 
given  before  the  making  of  said  advances. 

'Tt  has  been  well  said  by  a  distinguished  author 
(Perry)  that  'the  right  to  tax  on  the  part  of  the  govern- 
ment grows  out  of  the  whole  service  rendered  by  the 
government  to  the  individual ;  and  that  as  a  return  ser- 
vice (or  tax)  is  connected  with  and  limited  by  the 
exchanges  which  the  individual  makes  under  the  eye  of 
the  government,  the  tax  itself  should  be  proportioned  as 
nearly  as  possible  to  the  amount  of  those  exchanges, 
and  should  be  justified  simply  on  the  ground  of  them.' 

"As  before  shown,  in  the  advances  made  by  a  build- 
ing association  to  one  of  its  co-operative  members  of 
moneys  on  his  stock,  which  he  pledges  to  said  association 

[74] 


LEGISLATION  AND  TAXATION. 

with  the  promise  to  continue  to  make  installment  pay- 
ments thereon  in  the  same  manner  and  amount  as  he  had 
been  making  as  a  simple  stockholder,  merely  adding 
thereto  interest  for  the  prior  use  of  the  money  contributed 
to  a  general  fund  by  himself  and  his  brother  stockholders, 
and  further  secured  by  a  pledge  of  the  real  estate  upon 
ivhich  he  is  paying  taxes  to  the  State, — in  such  a  trans- 
action there  are  no  exchanges,  in  the  commercial  accept- 
ance of  that  word;  and  as  those  securities  are  not  trans- 
ferable by  the  association  for  value,  or  otherwise,  and  are 
held  simply  for  the  performance  of  a  promise  made,  they 
cannot  enter  into  the  subject  of  exchanges;  hence,  there 
is  no  possible  justification  for  the  exaction  of  a  tax  there- 
on by  the  governing  power. 

"Thus  viewed  from  economic,  ethical  or  legal  stand- 
points, the  exemption  from  taxation  of  local  building  and 
loan  associations  appears  to  be  justified ;  and  as  these  as- 
sociations are  the  wisest,  best,  and,  hitherto,  most  prac- 
tical school  of  education  for  the  great  wage-earning  class 
which  our  civilized  world  has  evolved,  and  a  school 
which  rests  upon  a  membership  of  those  who  can  con- 
tribute, not  in  large  sums,  but  only  by  the  mites  saved 
from  meager  earnings,  the  necessity  of  fostering  and 
sustaining  such  associations  for  the  direct  and  indirect 
advantages  accruing  therefrom  to  the  nation  must  be 
apparent,  and  in  conclusion,  therefore,  it  may  be  safely 
said,  that  the  necessity  of  exempting  them  is  the  best 
justification  for  so  doing." 

The  Association  Is  a  Clearing  House  for  Its  Members. 

A  building  association,  being  purely  mutual  and  co- 
operative, and  being  conducted  for  the  mutual  benefit  of 
all  its  members,  is  in  reality  a  clearing  house  for  its 
membership.     It   is  a  place  where  the  members  gather 

1751 


CHAPTER  VI. 

to  exchange  mutual  accommodations,  and  in  operation, 
very  closely  resembles  that  of  tlie  clearing  houses  estab- 
lished for  the  accommodation  of  commercial  banks.  No 
proposition  has  ever  been  made  to  levy  taxation  upon  the 
activities  of  bank  clearing  houses,  and  the  same  principles 
which  would  exempt  those  institutions  from  taxation 
should  be  applied  to  the  business  of  building  associations, 
which  have  no  assets  on  which  they  can  realize.  From 
the  very  nature  of  its  character  it  has  nothing  that  should 
be  taxed,  outside  of  its  regular  office  fixtures,  books,  etc. 
As  these  are  of  but  little  commercial  value,  there  is  no 
valid  reason  that  can  be  advanced  why  the  association 
should  be  taxed  in  any  form. 

Not  only  iiave  many  of  the  several  States  thus  exemp- 
ted building  associations  from  taxation,  but  the  Federal 
Congress,  in  like  recognition  of  the  usefulness  of  these 
institutions,  and  of  the  unwisdom  of  burdening  them 
with  unnecessary  taxation,  has  in  every  revenue  measure 
passed  since  1891,  exempted  building  associations  from 
practically  every  form  of  Federal  taxation.  These  exemp- 
tions, however,  have  only  been  secured  by  the  earnest 
efforts  and  active  work  of  the  officers  and  committees 
of  the  United  States  League  of  Local  Building  and  Loan 
Associations,  co-operating  with  the  various  State  leagues, 
together  with  the  assistance  of  The  Atnerican  Building 
Association  Nc2vs.  Many  of  these  revenue  measures,  had 
they  been  passed  in  the  form  in  which  the}'  were  first  pre- 
sented to  Congress,  would  have  resulted  in  the  absolute 
destruction  and  annihilation  of  the  whole  building  and 
loan  association  movement  in  this  country. 

One  measure  which  might  be  referred  to  levied  an 
annual  tax  of  fifty  cents  per  thousand  on  the  authorized 
capital  of  all  corporations.  Had  this  measure  been 
enacted  in  the  form  in  which  it  was  introduced  it  would 
have  cost   the   building   associations   of   America   many 

[76] 


LEGISLATION  AND  TAXATION. 

millions  of  dollars  per  year.  When  the  facts  relating 
to  this  subject  were  presented  before  Congress  by  the 
representatives  of  the  building  associations  of  the  coun- 
try, Congress  very  promptly  recognized  and  admitted 
the  justice  and  necessity  of  the  exemption  asked  for,  and 
in  every  case  consented  that  building  associations  should 
not  be  made  subject  to  the  proposed  tax. 

Summaty  of  Revenue  Treasures, 

A  review  of  these  several  measures  is  of  such  interest 
and  instructive  value  that  we  present  the  following  sum- 
mary of  the  various  revenue  measures  and  the  exemption 
given  to  building  associations  from  time  to  time: 

In  1 89 1  Congress  passed  a  law  providing  for  the  levy 
of  a  Federal  income  tax,  and  inserted  therein  the  follow- 
ing provision :  "Nothing  herein  contained  shall  apply 
to  building  and  loan  associations  or  companies  which 
make  loans  only  to  their  shareholders."  The  Supreme 
Court  of  the  United  States  afterward  declared  this  income 
tax  law  unconstitutional,  but  in  its  enactment  Congress 
had  established  a  precedent  in  favor  of  building  and 
loan  associations,  which  has  been  consistently  followed 
in  every  succeeding  revenue  measure. 

In  1898,  the  Spanish- American  war  made  it  neces- 
sary for  the  Federal  government  to  obtain  increased 
revenue,  fur  which  purpose  Congress  enacted  the  Stamp 
Act.  This  law  contained  the  following  exemption 
clause:  "Provided  further  that  stock  and  bonds  issued 
by  co-operative  building  and  loan  associations,  *  *  * 
and  building  and  loan  associations  or  companies  that 
make  loans  only  to  shareholders,  shall  be  exempte<l  from 
the  tax  herein  provided." 

In  1909  Congress  passed  a  law  taxing  the  capital 
.stock  of  corporations,  and  after  strenuous  efforts  on  the 

1771 


CHAPTER  yi. 

part  of  Iniildiug  association  representatives  these  institu- 
tions were  exenipted  from  this  tax  in  the  following  lan- 
guage :  after  naming  several  cortx)rations  to  which  the 
tax  should  not  apply,  the  following  words  were  added : 
"Nor  to  domestic  huilding  and  loan  associations  organ- 
ized and  operated  exclusively  for  the  mutual  benefit  of 
their  memliers." 

In  administering  this  act  of  Congress,  Internal  Revenue 
collectors  in  different  parts  of  the  country  took  different 
views  in  construing  its  terms  and  conditions,  which  re- 
sulted in  litigation.  Two  cases  arose  in  Ohio  in  which 
the  collector  decided  that  an  association  which  accepted 
deposits  from  non-members  was  not  "operated  exclu- 
sively for  the  mutual  benefit  of  their  members" ;  and  in 
New  Jersey  a  collector  insisted  that  an  association  which 
paid  a  different  rate  of  dividend  to  various  classes  of 
stockholders  was  not  "operated  for  the  mutual  benefit 
of  their  members."  The  result  of  the  litigation  over  both 
of  these  questions  resulted  in  a  victory  for  the  building 
associations,  the  courts  holding  that  the  facts  urged  by 
the  collector  did  not  make  the  association  liable  for  the 
tax. 

The  Ohio  cases  above  referred  to  are : 

Central  Building  and  Loan  Association  vs. 
Bozvland.  Belief ontaine  B.  &  L.  Association 
vs.  McMakcn.     216  Federal  Reporter  526. 

The  New  Jersey  case  above  referred  to  is : 

Park  Viezv  Building  and  Loan  Association 
vs.  Herold.    203  Federal  Reporter  876. 

Under  this  Federal  excise  tax  law  of  August  5,  1909, 
the  Commissioner  of  Internal  Revenue  ruled  that  certain 
building  associations  were  subject  to  the  tax,  and  quite 

[781 


LEGISLATION  AND  TAXATION. 

a  number  of  them  were  required  to  pay  the  tax,  which 
they  did  under  protest.  After  the  court  decision  referred 
to  was  handed  down,  Congress  passed  a  bill,  authorizing 
such  associations  to  file  a  claim  for  refunder,  and  all  the 
associations  which  did  so  recovered  the  tax  they  had 
wrongfully  been  required  to  pay. 

On  October  22,  19 14,  Congress  passed  an  act  known 
as  "The  Emergency  Revenue  Law"  in  Section  15,  of 
which  Congress  adopted  almost  the  exact  language  con- 
tained in  the  Stamp  Act  of  1898,  the  exemption  reading 
as  follows: 

"Provided  further  that  slocks  and  bonds  issued  by  co-operative 
building  and  loan  associations,  *  ♦  ♦  and  building  and  loan 
associations  or  companies  that  make  loans  only  to  their  shareholders, 
shall  be  exempted  from  the  tax  herein  provided." 

The  Income  Tax  Law,  passed  September  8,  1916, 
levying  an  income  tax  on  individuals  and  corporation's 
incomes,  exempted  building  and  loan  associations  in  its 
provisions.  Under  Section  11,  Title  t  of  this  act,  is  the 
provision : 

"Section  11,  (A).  That  there  shall  not  be  taxed  under  this  title 
any  income  received  by  *  *  *  4th,  domestic  building  and  loan 
associations  and  co-operative  banks  without  capital  stock,  organized 
and  operated  for  mutual  purposes,  and  without  profit." 

Under  Title  4  of  the  .same  act,  a  special  license  tax 
is  imposed  upon  corporations.  Building  associations 
were  exempted  from  this  tax  by  a  proviso  in  Section 
407,  as  follows: 

"And  provided  further  that  this  tax  shall  not  be  imposed  upon 
any  corporation,  joint  stock  company,  or  association,  or  insurance 
company  not  engaged  in  business  during  the  preceding  taxable  year, 
or  which  is  exempted  under  the  provisions  of  Section  11,  Title  1,  of 
this  act." 

1791 


CHAPTER  VI. 

Thr  act  of  March  3,  IQ17.  levied  a  lax  on  excess 
profits  ot)  all  corporaliocis  having  an  income  of  $5.ocx).oo 
or  more  for  the  taxable  year.  Section  J04  of  this  act 
exempted  building  associations  from  its  provisions  in 
the  following  language: 

"Section  204.  That  corporations  exempted  from  tax  under  tlic 
provi^ons  of  Sectio4»  1,  Title  1,  of  tlie  act  approved  September 
8,  19iG,  and  partnerships  carrying  on  or  doing  business,  shall  be 
exempted  from  the  provisions  of  this  Title,  and  the  tax  imposed 
by  this  bill  shall  not  attach  to  incomes  of  partnerships  derived  from 
agriculture  or  for  personal  services." 

On  October  3,  191 7.  Congress  passed  the  War  Revenue 
Act,  levying  additional  tax  upon  every  corporation,  joint 
stock  company,  or  association  or  insurance  company, 
subject  to  the  tax  imposed  by  Section  10  of  the  act  of 
April  8,  1916.  Since  building  associations  were  exemp- 
ted under  the  act  of  19 16,  they  were  thus  exempted 
frmn  the  tax  imposed  by  the  War  Revenue  Act. 

Summary^ 

This  review  of  the  revenue  legislation  of  the  govern- 
ment since  1891  shows  a  settled  and  consistent  policy 
on  the  part  of  Congress  to  recognize  the  rights  of  build- 
ing and  loan  associations  to  ask  and  receive  exemption 
from  taxation,  and  this  recognition  of  the  usefulness  of 
building  associations  and  of  the  helpful  and  beneficial 
work  which  they  are  doing,  has  been  of  untold  benefit  to 
these  institutions  and  adds  much  to  their  strength  and 
prestige. 

In  most  of  the  States  formation  of  building  and  loan 
associations  is  encouraged,  and  stimulated  by  the  pro- 
visions of  the  laws  requiring  only  a  nominal  charge  for 
incorporation  fees  for  ol>taining  a  charter.  In  some  of  the 
States,   notably   West   Virginia  and  Kentucky,  the   fees 

IBO] 


LEGISLATION  AND  TAXATION. 

for  obtaining  charters  are  still  unnecessarily  heavy,  and 
burdensome.  This  was  formerly  true  in  the  State  of 
Michigan,  but  in  19 17  the  Legislature  of  Michigan 
amended  the  laws  regulating  the  charter  fees  of  build- 
ing and  loan  associations,  and  provided  that  the  fees 
should  be  based  upon  the  capital  stock  actually  paid  in, 
rather  than  upon  authorized  capital.  Proper  steps  should 
be  taken  in  those  States  where  unnecessary  burdens  are 
thus  imposed,  and  the  laws  should  be  so  amended  as  to 
bring  those  States  into  harmony  with  the  enlightened 
provisions  in  the  laws  of  most  States  of  the  Union, 


161 


CHAPTER  VII. 

Plans  of  Associations. 

The  Terminating  Plan. 

The  building  associations,  since  its  introduction  into  the 
United  States  in  1831,  has  appeared  in  three  distinct 
forms. 

The  first  association  was  on  the  "terminating"  plan. 
This  type  was  useful,  but  has  largely  disappeared,  giving 
way  to  more  popular  forms.  A  few  terminating  asso- 
ciations, however,  still  exist.  In  the  terminating  associa- 
tion, all  the  stock  is  issued  as  of  one  date.  Such  an  asso- 
ciation is  organized  on  the  presumption  that  all  the  stock 
will  be  subscribed  at  the  opening  meeting.  This,  how- 
ever, is  seldom  done.  The  consequence  is,  that  shares 
sold  after  the  first  meeting  must  be  sold  at  such  price 
as  to  make  them  equal  in  value  to  those  already  issued. 
To  do  this,  the  sum  paid  must  equal  the  amount  already 
paid  in  as  installments  by  the  subscribers  to  the  original 
shares,  with  such  additional  sums  as  will  represent  the 
profit  already  accrued.  If  the  regular  dues  should  be 
$1.00  per  week,  a  person  subscribing  for  a  share  after  the 
association  has  run  ten  weeks,  must  pay  $10.00  for  the 
share.  In  like  manner,  if  the  association  has  been  running 
for  a  longer  period,  his  initial  payment  must  be  as  many 
dollars  as  the  number  of  weeks  the  association  has  been 
running,  and  if  profit  has  already  been  earned,  he  must 
pay  such  additional  amount  upon  his  share  as  will  cor- 
respond to  the  earnings  of  the  original  share  up  to  that 
time. 

[82] 


PLANS  OF  ASSOCIATIONS. 

After  an  association  organized  on  this  plan  has 
run  for  a  time  the  sum  of  money  which  a  prospective 
member  would  be  required  to  pay  in  order  to  gain  mem- 
bership is  so  large,  including  the  back  installments,  ac- 
crued profits,  and  other  incidental  charges,  that  the  aver- 
age wage-earner  would  find  it  impossible  to  join.  In  its 
practical  working,  therefore,  an  association  organized 
on  this  plan  confines  its  membership  to  the  group  which 
joined  at  the  beginning,  or  acquired  membership  shortly 
thereafter,  and  this  condition  produces  the  logical  result 
of  restricting  terminating  associations  to  small  member- 
ship, and  thereby  limiting  their  usefulness. 

In  a  terminating  association  all  the  shares  are,  of 
course,  at  all  times,  of  equal  value.  Whenever  the  total 
amount  of  dues  paid  in  and  the  accumulated  profits  equal 
the  par  value  of  all  the  shares,  the  association  terminates, 
and  its  affairs  are  wound  up.  Each  stockholder  who  has 
not  borrowed  his  money  in  advance  receives  the  full 
value  of  his  share.  To  those  who  have  made  loans  from 
the  association,  their  mortgages  are  cancelled  and  re- 
ceipted and  returned  in  full. 

No  better  or  clearer  explanation  of  the  plan  and  theory 
on  which  these  terminating  societies  were  organized  and 
oi)erated  has  ever  been  written  than  that  found  con- 
tained in  the  paper  prepared  by  the  late  Addison  B. 
Burk,  of  Philadelphia,  and  presented  at  the  first  meeting 
of  the  United  States  League  of  Local  Building  and  Loan 
Associations  at  Chicago,  in  1893.  This  explanation  is 
of  such  interest  and  historic  value  that  we  include  the 
following  extract  therefrom:  (Mr.  Burk  was  for  many 
years  a  leader  in  the  building  association  movement  in 
America ;  was  president  of  the  United  States  League  of 
Building  Associations  in  1912;  and  by  his  rare  training 
and  intelligent  and  untiring  efforts,  did  much  to  advance 

1831 


CHAPTER  VII. 

building  association  interests  and  to  aid  in  bringing  it 
to  its  present  commanding  position  of  power  and  in- 
fluence in  the  affairs  of  this  country.) 

The  •P'viinmmsnt  Plan  Described. 

"The  building  association  system,  in  the  simpler  forms,  may  be 
made  plain  in  this  way.  One  hvmdred  men,  each  able  to  save  $1  a 
month  agree,  in  order  to  strengthen  each  other  in  their  purpose 
to  save,  to  put  their  money  together  at  fixed  periods  and  lock  it  up 
in  a  strong  box  until  each  shall  have  accumulated  $200. 

It  is  easy  enough  to  see  that  if  each  man  is  prompt  in  his  pay- 
ments the  strong  box  will  be  ready  to  be  opened  for  a  division  of 
the  savings  at  the  end  of  two  hundred  months,  when  each  share  will 
be  worth  $200. 

But  let  it  be  supposed  that  as  soon  as  this  agreement  has  been 
entered  into,  by  which  one  hundred  men  come  together  monthly 
and  put  a  dollar  each  into  a  common  fund,  one  of  the  members 
suggests  that  instead  of  allowing  the  money  to  lie  idle  in  the  box, 
they  had  better  put  it  out  at  interest  each  month,  putting  the  securi- 
ties for  its  return  and  the  interest  into  tlie  box  as  fast  as  earned. 

At  a  glance  the  other  members  see  that  by  acting  on  this  sugges- 
tion they  will  accumulate  the  $200  each  share  in  less  than  two 
hundred  months,  perhaps  in  one  hundred  and  fifty  months,  when 
they  will  have  paid  only  $150  each. 

The  suggestion  is  adopted,  and  now  we  have  a  purely  co-opera- 
tive savings  fund  or  building  association,  with  only  one  distinguish- 
ing feature,  and  that  one  of  great  value — the  savings  are  compul- 
sory and  made  at  stated  period.s. 

The  member  does  not  lay  aside  his  spare  cash  as  humor  prompts 
him,  but  enters  into  an  obligation  to  pay  so  much  per  month.  In 
this  scheme,  as  thus  far  developed,  we  have  the  essential  feature 
of  our  building  and  loan  associations. 

The  other  branches  of  business  in  which  they  engage,  although 
they  give  character  and  name  to  the  associations,  are  really  inci- 
dental to  the  accomplishment  of  the  one  grand  purpose,  that  of 
saving  money  by  co-operation  and  by  compulsory  payment  into  the 
treasury. 

The  first  problem  that  presents  itself  to  the  directors  is:  how  to 
use  the  money  collected  the  first  month.  The  piirpose  of  the  society 
will  be  destroyed  if  it  is  not   safely  invested.     .Shall   it  be  put  in 

184] 


PLANS  OF  ASSOCIATIONS. 

government  bonds  at  a  low  rate  of  interest,  or  invested  in  bond 
and  mortgage,  with  real  estate  security  at  a  reasonable  rate?  If  the 
latter  course  is  adopted,  to  whom  shall  it  be  loaned?  George  Burton, 
who  is  not  a  member  of  the  society,  desires  to  borrow,  but  so  also 
does  John  Dubree,  who  is  a  member.  If  the  society  lends  to  John 
Dubree  it  will  have  security  additional  to  that  represented  by  his 
bond  and  mortgage — in  his  stock  or  deposits,  growing  in  value 
month  by  month.  To  get  this  additional  security  for  all  the  money 
it  lends,  and  at  the  same  time  secure  a  higher  rate  of  interest  for 
the  money  than  could  be  obtained  from  government  bonds,  the 
society  determines  to  lend  only  to  members. 

Now  it  appears  that  other  members  besides  John  Dubree  want 
to  borrow  the  first  month's  collections.  How  shall  it  be  decided 
between  them?  Obviously,  the  fairest  plan  is  to  let  them  bid  one 
against  the  other,  and  lend  it  to  the  man  who  is  willing  to  give 
the  highest  premium  over  and  above  the  fixed  or  legal  rate  of 
interest. 

This  course  is  adopted  and  the  association  finds  itself  in  posses- 
sion of  two  sources  of  profit,  interest  on  loans  to  its  own  members, 
and  premiums  for  the  prior  use  of  the  money  collected. 

It  is  manifest  now,  that  instead  of  requiring  two  hundred  months 
in  which  to  accumulate  in  the  strong  box  enough  money  to  divide 
$200  per  share,  it  will  only  take,  possibly,  one  hundred  and  twenty- 
six  months. 

If,  in  the  course  of  time,  a  member  should  fail  to  pay  his  install- 
ment, and  this  should  be  permitted,  the  member  withholding  his 
deposit  and  depriving  the  association  of  its  use  would  in  the  end 
have  an  advantage  over  his  fellow  members. 

To  check  this  a  fine  is  imposed  when  installments  are  delayed, 
that  the  fine  may  serve  as  a  penalty  as  well  as  to  reimburse  the 
association  for  the  loss  of  the  use  of  the  money. 

Another  member  finds  that  he  cannot  keep  up  his  payments,  or 
he  desires  to  move  to  another  city.  To  accommodate  him  the  asso- 
ciation agrees  to  open  its  strong  box  before  the  appointed  time, 
give  him  what  he  has  paid  in,  with  some  portion  of  the  profit  already 
gained,  and  cancel  his  stock. 

Now  it  is  seen  that  there  are,  besides  the  saving  money  and 
interest  upon  it,  several  sources  of  profit,  namely:  Premiums  arising 
from  competition  for  the  loans,  penalties  for  non-payment  of  dues, 
and  a  portion  of  the  profits  withheld  from  members  who  fail  to 
remain  in  the  association,  and  whose  stock  is  cancelled.  And  so  the 
features  of  a  building  and  loan  association  are  developed. 


CHAPTER  VII. 

At  last,  between  12(J  and  140  months,  and  when  from  $126  to 
$140  have  been  paid  in  on  each  share,  the  strong  box  is  found  to 
contain  securities  or  money  sufficient  to  divide  and  give  to  each 
share-borrower  and  non-borrower  alike,  $200. 

The  time  has  come  for  the  association  to  be  "wound  up,"  techni- 
cally speaking.  Each  holder  of  an  unborrowed  or  free  share  gets 
$200  in  cash;  each  borrower  is  entitled  to  his  bond  and  mortgage, 
so  tlie  account  is  squared  by  the  cancellation  of  the  mortgage. 

This  description  relates  to  a  single  series  society,  the  kind  first 
organized.  For  many  years  they  met  with  no  trouble.  They  were 
organized  by  little  groups  of  working  men.  Every  member  intended 
to  borrow  when  occasion  served,  and  the  demand  for  money  was 
kept  up  to  the  end ;  but  the  success  of  these  single  series  societies 
proved  their  downfall.  Gradually  men  of  means  began  to  join  the 
workingmen's  societies.  They  did  not  want  to  borrow  money,  but 
they  wanted  to  get  good  interest  on  periodical  investments. 

The  societies  contained  such  a  large  proportion  of  drones  that 
it  was  impossible  to  lend  money  and  as  it  was  idle,  profits  were 
reduced.  Borrowers  could  not  be  brought  in,  as  year  by  year  the 
cost  of  back  dues  and  profits,  which  had  to  be  paid  to  put  all  on  an 
equality,  increased,  until  it  became  prohibitive.  It  was  then  that  the 
idea  of  serial  societies  was  started.  I  am  still  of  the  opinion  that  a 
single  series  society,  composed  wholly  of  workingmen,  who  intended 
to  become  borrowers,  is  the  best ;  but  it  is  now  almost  impossible 
to  organize  such  a  society.  By  issuing  the  stock  in  series  a  constant 
demand  for  the  money  can  be  maintained,  but  inconveniences  of  an- 
other sort  arise  which  need  not  here  be  discussed  in  detail  further 
than  to  indicate  that  if  the  money  is  kept  invested  enough  of  it  may 
not  be  ready  to  pay  maturing  share,  and  that  the  accounts  become  in- 
volved— even  when  the  series  are  treated  as  partners  and  the  profits 
are  divided  between  the  series  as  in  a  partnership  business." 

The  Serial  Plan. 

The  second  phase  of  building  association  development 
is  the  Serial  Plan.  This  is  a  very  natural  evolution  from 
the  terminating  form.  By  some  this  is  called  the  "Phila- 
delphia" or  "Pennsylvania"  plan.  The  association  is 
usually  chartered  with  authority  to  issue  a  definite  amount 
of  stock,  and  to  run  a  definite  number  of  years.  Instead 
of  selling  and  issuing  all  the  stock  as  of  the  same  date, 

186] 


PLANS  OF  ASSOCIATIONS. 

it  is  divided  into  series,  the  first  series  being  sold  as  of 
the  date  of  the  beginning  of  the  first  term.  Subscribers 
to  this  series  of  stock  who  come  in  after  its  first  organiza- 
tion are  required  to  pay  back  dues,  just  as  in  a  terminating 
association.  When  this  series  has  run  for  such  a  length  of 
time  as  to  make  it  difficult  and  burdensome  for  new  sub- 
scribers to  purchase  shares  of  the  first  series,  the  practice 
is  to  declare  that  series  closed,  and  begin  the  issue  of  a 
second  series. 

The  frequency  with  which  new  series  are  issued  varies 
in  different  parts  of  the  country.  In  some  associations 
they  are  issued  annually;  in  others  semi-annually,  and 
still  others  open  a  new  series  quarterly.  In  some  associa- 
tions the  number  of  shares  in  a  series  is  limited,  while  in 
other  associations  no  limit  is  placed  on  the  number  of 
shares  which  may  be  issued  in  a  series.  After  the  first 
series  has  been  issued,  and  before  opening  a  second  one, 
the  total  assets  of  the  association  are  ascertained,  and  di- 
vided by  the  number  of  shares  outstanding,  which  gives 
the  book  value  of  each  share  in  the  series.  Deducting  the 
total  dues  for  the  term  from  the  total  assets  gives  the 
profit  for  that  term. 

.^t  the  end  of  the  second  term,  and  before  issuing 
a  third  series,  the  profits  on  all  shares  in  all  series,  as 
shown  by  the  last  preceding  report,  should  be  deducted 
from  the  total  profits  of  that  date.  The  remainder  will 
be  the  net  profit  for  the  current  term.  Dividing  this  net 
profit  by  the  total  number  of  shares  then  outstanding 
gives  the  profit  to  be  added  for  that  term  to  each  share 
outstanding.  A  fuller  detail  of  the  plan  and  method  of 
figuring  will  be  given  in  a  later  chapter  of  this  work.  It 
will  be  seen  that  the  older  the  series,  the  greater  the 
value  of  the  share. 

[87] 


CHAPTER  VII. 

In  some  associations,  ojicralcd  under  this  plan,  a  mem- 
ber is  permitted  to  purchase  shares  in  any  of  the  older 
series,  by  paying  the  book  value  of  the  share  at  the  time 
he  joins.  In  other  associations  this  is  not  permitted, 
and  in  some  States  the  law  forbids  associations  to  issue 
shares  in  any  older  series  after  a  new  series  has  been 
opened,  and  requires  that  members  can  join  only  by 
purchasing  shares  in  the  then  current  series.  After  an  as- 
sociation has  run  for  ;seven  to  twelve  years  the  first  series 
reaches  its  ultimate  value;  that  is  to  say,  the  paid-in  dues, 
and  the  profits  accrued  amount  to  a  sum  equal  to  the  par 
value  of  the  share,  and  this  series  is  then  said  to  be 
matured,  and  the  holders  of  its  shares  are  then  entitled 
to  receive  in  cash  the  par  value  of  their  shares.  Those 
members  who  are  holding  "Free  Shares"  in  that  series 
are  paid  in  cash,  and  the  borrowers  who  have  made  loans 
in  that  series  have  their  mortgages  released  and  can- 
celled. The  association  now  has  reached  the  period  when 
each  series  of  shares  must  be  paid  off  as  it  matures. 

Paying  Off  a  Matured  Series. 

One  of  the  most  perplexing  and  embarrassing  prob- 
lems which  confront  an  association  operated  on  the  serial 
plan  is  to  determine  the  best,  most  convenient  and  equit- 
able plan  for  paying  off  a  matured  series.  In  theory, 
the  holders  of  free  shares  in  a  matured  series  are  entitled 
to  receive  the  cash  value  of  their  shares  from  the  funds 
in  the  association  treasury.  It  can  readily  be  seen  that 
an  association  whose  funds  are  accumulated  by  the  small 
payments  of  its  members  might  not  have  in  its  treasury 
a  sum  equal  to  the  earnings  which  a  series  has  been  ac- 
cumulating through  a  period  of  from  seven  to  twelve 
years.  If  it  must  meet  this  withdrawal  series  from  its  or- 
dinary income  paid  in  by  its  members,  it  would  be  neces- 

[88] 


PLANS  OF  ASSOCIATIONS. 

sary  to  hoard  these  payments  for  some  weeks  or  months 
in  advance  of  the  maturity  of  the  series  in  order  to  meet 
these  payments.  This  would  be  unprofitable,  since  this  idle 
money  would  draw  no  interest  during  the  period  in  which 
it  was  being  accumulated.  In  some  serial  associations, 
however,  it  is  the  practice  to  meet  a  matured  series  by 
this  plan,  but  this  is  not  the  advisable  practice. 

A  great  variety  of  different  plans  are  followed,  some 
of  which  we  will  describe.  In  one  very  successful  New 
York  institution,  the  practice  is  not  to  hoard  up  money 
with  which  to  meet  a  matured  series,  but  when  a  series 
matures,  the  funds  are  permitted  to  remain  in  the  asso- 
ciation, subject  to  the  following  by-laws :  "Holders  of 
free  shares  in  matured  series  shall  receive  3  per  cent  on 
their  money  after  the  maturity  of  the  stock,  until  paid, 
and  may  withdraw  at  any  time  thereafter,  subject  to  the 
withdrawal  clause."  Further  provisions  in  this  act  state: 
''At  no  time  shall  more  than  two-thirds  of  the  funds  in 
the  treasury  of  the  association  be  applicable  to  the  pay- 
ment of  withdrawing  stockholders  and  holders  of  ma- 
tured stock,  without  the  consent  of  the  board  of  directors." 
By-laws  of  this  association  contain  these  further  pro- 
visions : 

"In  case  a  number  of  members  wish  to  withdraw  stock  at  the 
same  time,  notice  of  withdrawal  shall  have  precedence  according  to 
the  order  or  date  of  filing,  with  the  secretary. 

The  board  of  directors  shall  have  power  to  compel  withdrawal 
of  free  and  matured  stock,  in  alphabetical  or  other  order." 

Perhaps  no  better  plan  than  the  above  can  be  devised 
with  which  a  serial  association  can  meet  its  obligations  to 
pay  off  a  matured  series. 

In  some  associations  the  demand  of  holders  of  matured 
stock  is  met  by  borrowing  money,  cither  from  individuals 
or  local  banks.  This  method  of  obtaining  funds  for  this 
purpose  has  the  serious  drawback  that  such  loans  can 

189] 


CHAPTER  VII. 

only  be  obtained  for  a  limited  time,  and  usually  at  a  high 
rate  of  interest.  The  burden  of  accumulating;-  funds  for 
the  payment  of  a  matured  series  is  simply  shifted  to  a 
period  after  that  payment  instead  of  accumulating  them 
beforehand,  and  is  equally  unsatisfactory. 

Another  plan  is  practiced  in  some  associations  to  avoid 
the  embarrassment  of  meeting  obligations  for  matured 
shares.  For  some  months  prior  to  the  estimated  date  of 
maturity,  holders  of  shares  in  the  series  maturing  are 
compelled  to  withdraw  and  accept  the  book  value  of  their 
shares,  so  that  at  the  maturity  of  the  series,  the  liabilities 
to  the  shareholders  are  greatly  reduced  and  more  easily 
met. 

A  still  different  plan  is  followed  in  some  communi- 
ties, namely,  to  make  no  provision  for  meeting  the  ma- 
tured series,  in  cash,  but  after  the  date  of  maturity,  when- 
ever the  association  has  cash  on  hand  sufficient  to  redeem 
one  or  more  shares,  to  put  it  up  at  auction,  and  pay  to 
that  shareholder  in  the  matured  series  who  will  allow 
the  largest  discount  and  accept  the  smallest  sum.  In 
associations  following  'this  plan,  these  discounts  fre- 
quently form  a  very  considerable  addition  to  the  profits 
realized  by  the  remaining  stockholders.  This  serial  plan 
may  be  compared  to  a  piece  of  machinery,  each  series 
representing  a  small  cog-wheel  and  all  operating  upon 
one  grand  revolving  wheel.  These  smaller  wheels  are 
inserted  one  after  another  in  their  regular  order.  When 
the  first  one  has  worn  out,  at  the  end  of  from  seven  to 
twelve  years,  a  new  one  is  inserted  in  its  place,  which  will 
run  an  equal  period,  and  as  each  of  the  smaller  cogs  has 
served  its  purpose  and  done  its  work,  it  is  replaced  by 
a  new  one,  and  so  on  continually,  the  old  machine  thereby 
beings  kept  constantly  in  repair,  and  in  perfect  operating 
condition. 

[90] 


PLANS  OF  ASSOCIATIONS. 

Advantages  of  Serial  Plan. 

It  will  be  seen  that  the  serial  association  is  a  great  im- 
provement over  the  old  terminating  plan,  inasmuch  as 
it  is  much  more  practicable  and  adapted  in  its  operation 
to  the  demands  likely  to  be  made  upon  it.  It  provides 
for  the  constant  introduction  of  new  members  and  new 
money,  and  has  in  it  the  element  of  permanency  and 
perpetual  operation.  Its  life  is  being  constantly  re- 
newed ;  as  one  branch  withers  and  drops  away,  another 
grows  in  its  place. 

The  plan  originated  in  the  city  of  Philadelphia,  where 
building  associations  have  had  their  greatest  demonstra- 
tion of  practical  usefulness.  From  Philadelphia,  it 
spread  over  the  country  until  it  became  the  prevailing 
form.  As  a  result  of  this  serial  plan,  in  fact,  the  majority 
of  the  associations  doing  business  in  the  United  States, 
have  adopted  it. 

The  Permanent  Plan. 

As  the  building  association  idea  became  better  under- 
stood, and  grew  in  strength,  numbers  and  popularity,  a 
necessity  arose  for  some  plan  or  form  of  control,  more 
pliable  and  flexible  than  either  the  terminating  or  the 
serial  form.  To  supply  this  need  a  modification  of  type 
then  appeared,  now  styled  "The  Permanent  Plan.  This 
had  its  origin  in  the  State  of  Ohio,  and  from  its  intro- 
duction has  been  received  with  great  favor,  and  has  re- 
sulted in  the  association  adopting  it  having  unprecedented 
growth.  Under  this  plan  associations  in  Ohio  are 
granted  perpetual  charters,  the  amount  of  their  capital 
stock  being  fixed  at  a  certain  sum,  and  as  continued 
growth  makes  it  necessary,  this  authorized  capital  is  in- 
creased, in  the  manner  i)rovided  by  law.  Under  the 
laws  of   this   State,   after  articles  of   incorporation   are 

L91J 


CHAPTER  Vll. 

issued,  the  organization  may  be  completed,  and  business 
begiin  when  5  per  cent  of  the  authorized  capital  has 
been  subscribed. 

As  the  whole  building  association  system  has  been 
one  of  evolution  and  development,  from  the  first  type 
shown  in  the  terminating  plan,  to  the  more  highly  de- 
veloped and  practical  serial  system,  so  this  permanent 
plan  has  gone  through  a  system  of  changes  and  evolution 
until  it  has  developed  into  a  type  differing  in  many  minor 
features  from  the  plan  when  first  adopted.  It  is  deemed 
unnecessary  to  record  here  the  various  steps  and  changes 
disclosed  in  the  evolution  of  the  permanent  plan,  so  we 
shall  briefly  describe  its  plans  and  methods  as  now  prac- 
ticed by  the  most  progressive  and  successful  associations. 

In  a  permanent  association  the  shares  are  fixed  usually 
with  a  par  value  of  $100.00,  $250.00  or  $500.00.  The 
regular  dues  usually  are  fixed  at  twenty-five  cents  per 
week,  or  one  dollar  per  month,  on  each  share.  In  many 
associations  operating  under  this  -plan  payments  of  fifty 
cents  and  one  dollar  per  share  per  week  are  required.  A 
member  may  subscribe  for  one  or  more  shares,  no  limit 
being  placed  upon  the  number  a  member  may  own.  The 
share  may  either  be  paid  up  in  installments,  or  in  full  at 
the  time  of  subscription,  and  issued  as  paid-up  shares.  The 
installment  shares,  or  "Running  Stock,"  as  it  is  some- 
times called,  are  evidenced  by  a  pass-book,  in  which  all 
payments  and  dividends  are  credited,  and  in  which  all 
withdrawals  are  charged. 

While  the  by-laws  usually  specify  what  the  regular 
periodical  payments  on  installment  stock  shall  be,  as  a 
matter  of  practice,  the  associations  pay  little  or  no  atten- 
tion to  the  regularity  of  these  payments.  The  owner 
of  installment  stock  is  permitted  to  make  payments  at 
any  time,  in  any  amounts,  according  to  his  circumstances. 
One  of  the  striking  features  of  this  plan  is  that  no  fines 

[92] 


PLANS  OF  ASSOCIATIONS. 

or  penalties  are  assessed  or  charged  against  the  holder 
of  installment  stock  for  failure  to  make  regular  pay- 
ments. He  is  given  perfect  liberty  to  pay  more  or  less 
than  the  regular  required  dues,  or  to  suspend  payment 
altogether,  if  he  chooses  to  do  so.  The  opinion  is  some- 
times expressed  that  unless  regular  payments  were  en- 
forced by  the  infliction  of  a  fine,  that  members  will  not 
pay,  and  that  the  revenues  of  the  association  would 
dwindle  and  disappear.  Practical  experience,  however, 
has  shown  that  there  is  no  ground  for  fears  of  this  sort, 
and  the  success  of  hundreds  of  associations  that  have 
abolished  fines  entirely,  and,  having  done  so,  found  their 
receipts  actually  greater  than  when  fines  were  inflicted, 
seems  ample  proof  that  the  system  of  fining  delinquents 
can  be  abolished,  and  by  doing  so  the  association  enjoy 
greater  prosperity. 

Under  the  permanent  plan,  a  member  is  aTliberty  to 
subscribe  for  stock  and  join  the  association  at  any  time, 
without  being  required  to  pay  back  dues,  and  participating 
in  the  profits  of  the  association  from  the  date  he  became 
a  member. 

The  practical  experience  of  associations  operating  on 
this  plan  has  demonstrated  that  one  great  reason  for  its 
popularity  and  .success  is  the  fact  that  under  this  plan  of 
saving  money  the  association  is  enabled  to  fill  the  vary- 
ing needs  of  each  of  its  members.  At  the  time  a  member 
joins  the  association,  his  circumstances  may  be  such  that 
the  regular  payment  on  the  number  of  shares  for  which  he 
subscribed  may  be  the  maximum  limit  of  the  sum  he  may 
be  able  tf)  save.  It  fre<iuently  happens  that  as  time  goes 
by,  he  is  able  to  save  larger  sums  than  he  thought  he 
could.  Under  this  plan  he  can  readily  increase  his  pay- 
ments and  deposit  the  larger  sum  which  he  has  at  com- 
mand, and  receives  his  reward  for  his  increased  pay- 
ments by  the  larger  dividends  which  are  credited  to  him 


CHAPTER  VU. 

at  each  distribution.  On  the  other  hand,  in  case  he  has 
over-esthnated  his  abiUty  to  save  money,  and  finds  him- 
self unable  to  carry  the  full  number  of  shares  for  which 
he  has  subscribed,  and  desires  to  make  smaller  payments, 
or,  under  some  circumstances,  to  suspend  payments  alto- 
gether for  a  time,  he  can  do  so  without  loss,  and  when 
improved  circumstances  again  permit,  he  can  again  re- 
sume his  payments. 

Paid-U^  Stock, 

Perhaps  no  feature  of  the  permanent  plan  has  been 
more  severely  criticized  by  the  adherents  of  the  older 
type,  of  association,  than  the  feature  which  permits  per- 
manent associations  to  issue  certificates  of  paid-up  stock. 
The  membership  of  the  early  associations,  as  has  been 
related,  was  confined  to  the  people  in  humble  circum- 
stances, who  had  limited  sums  of  money  at  command. 
The  class  of  members  that  affiliated  with  these  early 
associations  could  not  command  money  in  sums  suffi- 
cient to  purchase  paid-up  stock,  and  many  people  formed 
the  opinion  that  no  other  class  of  people  should  be  per- 
mitted to  obtain  membership  in  these  associations. 

This  opinion  may  have  been  well  founded  in  the  early 
days  of  the  association's  development,  when  loans  were 
made  at  a  high  rate  of  interest,  commanding  large  prem- 
iums, resulting  in  unusually  large  dividends  to  investors. 
It  may  have  been  proper  to  oppose  the  movement  to  open 
the  doors  of  such  associations  to  investors  of  large  capital, 
giving  them  the  opportunity  to  receive  excessive  divi- 
dends, paid  by  the  borrowers,  who  were  carrying  a  bur- 
den of  excessively  high  interest  on  their  loans.  But 
under  the  development  of  the  permanent  plan,  the  rate 
of  interest  on  loans  has  continuously  declined,  until  now, 
under  this  plan,  a  building  association  loan  does  not  draw 
a  higher  rate  of  interest  than  does  a  loan  made  on  similar 

[941 


PLANS  OF  ASSOCIATIONS. 

property  through  other  agencies.  At  the  same  time,  the 
rate  of  dividends  paid,  and  the  profits  received  by  the  in- 
vesting members,  under  the  permanent  plan,  have  met 
with  a  Hke  decline.  While  building  associations  in  prac- 
tically every  community  pay  a  higher  rate  of  dividend 
on  their  stock  than  is  received  by  depositors  in  other 
financial  institutions  in  that  community,  yet  this  rate  is  so 
moderate  as  not  to  be  especially  attractive  to  holders  of 
large  sums  of  capital,  since  by  investing  in  the  ordinary 
channels  of  commerce  and  trade,  and  in  industrial  in- 
stitutions, large  capital  usually  receives  more  generous  re- 
turns than  are  paid  by  building  associations.  Members 
who  invest  in  paid-up  stock  in  these  permanent  associa- 
tions are  usually  more  concerned  over  the  safety  of  their 
investment  than  over  the  rate  of  dividend  which  it  will 
return,  and  it  is  this  feature  of  safety,  rather  than  of 
large  profit,  which  attracts  investors  in  the  paid-up  stock 
of  permanent  associations. 

The  Fundamental  Princijiles  of  Building  Associations. 

There  is  another  feature  to  this  question  which  should 
be  given  due  consideration.  In  growing,  prosperous 
communities  there  is  usually  a  greater  demand  for  loans 
with  which  to  finance  home-building  than  ordinary  re- 
sources of  the  ass(5ciation  can  supply,  and  this  brings 
us  to  an  examination  of  the  question :  "What  are  the 
fundamental  principles  on  which  the  building  association 
is  founded?"  There  is  a  widespread  tendency  among 
building  association  men  to  consider  as  fundamental 
principles  many  of  the  practices  of  building  associations 
which  at  the  last  analysis  are  found  to  be  merely  means 
and  methods  with  which  to  work  out  into  practical  real- 
ization the  fundamentals  for  which  building  associations 
exist.     In  the  last  analysis  there  are  just  two  great  funda- 


CHAPTER  Vll. 

mental  aims  and  purposes  which  the  huilding  associations 
are  org-anized  to  accompHsh  :  First,  teaching  and  en- 
couraging the  practice  of  thrift ;  second,  aiding  and  stimu- 
lating the  building  of  homes.  Add  as  a  vital  factor  the 
idea  that  these  two  aims  and  purposes  shall  be  worked  out 
and  accomplished  thnnigh  the  medium  of  a  mutual,  co- 
operative institution,  and  you  have  all  the  elements  of  a 
building  association  that  are  vital  and  fundamental. 

In  this  analysis  we  have  placeil  the  practice  of  thrift 
and  saving  as  the  first  object  of  a  building  association, 
and  the  building  of  homes  as  a  second,  for  the  reason 
that  someone  must  save  before  anyone  can  build.  In  the 
early  associations,  when  the  membership  was  composed 
wholly  of  persons  with  comparatively  limited  resources, 
the  funds  of  the  association  were  very  seldom  sufficient 
to  supply  all  the  demands.  To  settle  the  question  as  to 
which  of  the  several  members  who  desired  loans  should 
be  first  accomodated,  the  right  to  receive  first  loan 
was  determined  by  competitive  bidding  of  premiums  on 
the  part  of  members.  This  naturally  resulted  in  making 
these  loans  expensive  to  the  borrower.  It  is  evident  that 
an  association  from  which  a  member  can  obtain  a  loan 
at  a  lower  rate  of  interest  is  much  more  useful  than  one 
in  which  the  aggregate  interest  and  premium  is  high. 
An  abundant  supply  of  money  in  the  association  treasury 
tends  to  cheapen  the  cost  of  loans  and  lightens  the  burden 
of  debt  on  the  borrower.  It  must  also  be  remembered 
that  a  member  holding  free  shares  and  saving  money  by 
periodical  installments  is  practicing  the  virtue  of  saving 
and  thrift,  and  when  he  changes  his  relation  to  the  asso- 
ciation and  becomes  a  borrower,  the  contribution  he  there- 
after pays  on  his  loan  is  merely  a  continuance  of  his 
practice  of  saving,  so  that  the  contributing  members  and 
the  borrowing  members  alike  are  engaged  in  the  exercise 
of  the  habits  of  saving  and  thrift,  the  one  accumulating 

[96j 


PLANS  OF  ASSOCIATIONS. 

funds  to  his  credit  in  the  association,  and  the  other  ac- 
cumulating property  in  the  shape  of  a  home.  The  funds 
of  the  saving  members  and  the  homes  of  the  borrowing 
members  being  merely  different  forms  of  wealth  which 
this  saving  helps  in  creating. 

When  a  member  desires  to  procure  a  home  through 
the  aid  of  a  loan  from  a  building  association,  it  is  im- 
material to  him  whether  the  funds  which  he  borrows  have 
been  accumulated  in  small  sums  by  a  large  number  of 
members,  or  whether  it  represents  a  lump  sum  paid  into 
the  association  treasury  by  a  single  member;  neither 
should  it  make  any  difference  to  an  association  whether 
the  profits  derived  from  the  loan  which  it  has  made  are 
distributed  among  a  large  number  of  members,  each 
with  a  small  sum  to  his  credit,  or  whether  it  is  turned 
over  to  a  few  members  who  have  large  sums  to  their 
credit,  so  long  as  the  principle  of  mutuality  is  observed, 
and  that  the  holders  of  large  sums  receive  no  greater 
rate  of  return  for  their  investment  than  do  the  holders 
of  the  smaller  sums. 

A  building  association  holds  itself  out  to  render  ser- 
vice to  its  community  in  aiding  home-building  and  in 
order  that  it  may  fulfill  its  mission  and  render  an  ade- 
quate service,  the  ideal  type  of  association  should  be 
prepared  to  supply  all  approved  applications  for  aid  of  this 
character  which  are  presented  to  it.  If,  in  order  to 
render  this  service  and  obtain  funds  with  which  to  supply 
these  desired  applications  for  loans,  it  becomes  necessary 
to  accept  offers  to  invest  large  sums  of  money  in  the  asso- 
ciation, instead  of  relying  wholly  on  the  small  sums  re- 
ceived in  the  usual  course,  there  can  be  no  logical  reason 
why  the  associations  should  not  do  so.  To  meet  these 
conditions  and  to  enable  the  association  to  render  this 
service  and   supply   these  demands    for    home-building 

[07] 


CHAPTER  VII. 

loans,  the  issuing  of  certificates  of  paid-up  stock  and  the 
acceptance  of  large  sums  of  money  finds  its  ample  justi- 
fication. 

Fines  for  Dehnquents. 

In  terminating  and  serial  associations,  while  the  mem- 
bers are  treated  as  a  group  and  not  as  individuals,  when 
the  distribution  of  profits  is  based  on  shares  rather  than 
on  share  values,  the  charging  of  fines  for  delinquency 
is  perhaps  a  necessity.  No  other  plan  has  yet  been  de- 
vised for  equalizing  the  values  of  the  shares.  Under  a 
plan  where  each  share  receives  the  same  amount  of  divi- 
dends, whether  regular  dues  have  been  paid  or  not,  it  is 
perhaps  a  necessity  that  fines  should  be  imposed  on  the 
delinquents,  for  otherwise  the  delinquent  member  would 
have  a  distinct  advantage  over  the  member  who  has 
paid  regularly  and  promptly. 

Under  the  permanent  plan,  this  reason  for  imposing  a 
fine  does  not  exist,  since  the  distribution  of  profits  is  not 
based  on  the  number  of  shares  issued,  but  is  computed 
on  the  sum  actually  paid  in  by  the  several  members  on 
their  shares.  The  member  who  is  neglectful  in  making 
payments  on  his  building  association  account  finds,  when 
dividend  day  arrives,  that  his  share  of  the  profits  is  not 
so  large  as  that  which  is  awarded  to  his  co-members 
who  have  been  more  thrifty  and  saved  a  larger  amount. 
This  method  of  rewarding  each  member  with  a 
dividend  in  exact  proportion  to  the  money  he  has  saved 
and  laid  by  in  the  association,  is  justified  by  every  princ- 
iple of  fairness,  justice  and  equity,  and  is  far  more  satis- 
factory and  less  complicated  than  the  plan  by  which  each 
share  is  given  the  same  amount  of  dividends  and  then  a 
deduction  made  from  the  delinquent  shares  in  order  to 
equalize  his  account  with  that  of  the  member  who  has 
paid   regularly.     There  is  something  repelling  and  ob- 

[98] 


PLANS  OF  ASSOCIATIONS. 

noxious  to  the  average  American  mind  toward  the  idea 
of  being  fined.  There  is  a  sort  of  "police-court"  flavor 
to  the  word  which  is  repellent  to  him,  and  the  principle 
involved  makes  the  matter  far  more  objectionable  than 
the  amount  of  money  which  the  fine  costs  him.  In  most 
associations  operating  under  the  permanent  plan  the  idea 
of  fining  members  for  delinquency  in  making  their  pay- 
ments has  been  wholly  abandoned. 

This  practice  of  eliminating  the  collection  of  fines  has 
been  a  matter  of  growth  under  the  permanent  plan.  In 
1 89 1,  when  the  permanent  plan  was  in  the  early  stages  of 
development  in  the  State  of  Ohio,  89  per  cent,  of  the 
associations  of  that  State  collected  fines,  and  in  that 
year  the  fines  collected  by  all  the  associations  in  that 
State  amounted  to  $78,000.00,  out  of  a  total  income 
of  $70,000,000.00,  or  a  fraction  over  one-tenth  of  one 
per  cent,  of  the  total  receipts;  while  in  1918  the  total 
fines  collected  by  Ohio  building  associations  amounted  to 
only  $23,676.00  out  of  a  total  receipt  of  more  than 
$335,000,000.00,  or  a  trifle  over  seven-thousandths  of  one 
per  cent.  A  similar  tendency  to  eliminate  fines  will  be 
observed  in  the  progress  of  associations  operating  under 
the  permanent  plan  in  other  States. 

Maturity  of  Shares. 

The  original  terminating  associations  were  organized 
on  the  theory  that  each  member  would  at  some  time  be- 
come a  borrower  from  the  association,  and  at  the  termi- 
nation of  the  life  of  the  association,  each  member  would 
have  his  loan  cancelled.  The  serial  plan  was  an  improve- 
ment in  this  idea,  and  recognized  the  fact  which  soon 
became  ai)i)arent,  that  only  a  portion  of  the  members 
of  a  series  would  become  borrowers  and  that  the  non- 
borrowers  would  receive  at  the  termination  of  the  life 
of  the  series,  the  value  of  their  shares  in  cash. 

I99i 


CHAPTER  VII. 

Bo[h  of  these  plans,  however,  are  based  on  the  idea  that 
all  the  stock-holders  interested  would  terminate  their  re- 
lations with  the  association,  at  least,  so  far  as  that  series 
was  concerned,  and  retire  from  membership;  or,  if  the 
stock-holders  in  the  series  just  closed  should  desire  to  con- 
tinue their  relation  with  the  association,  it  would  have  to 
be  through  assuming  a  new  relation,  by  affiliating  with  a 
new  series.  In  practical  experience  it  was  soon  demon- 
strated that  at  the  time  a  series  matured  not  all  the  mem- 
bers of  the  association  desired  their  money,  or  had  im- 
mediate use  for  it.  It  was  also  disclosed  that  a  great  many 
shareholders  had  use  for  their  savings  long  before  the 
series  matured.  It  is  a  common  experience  of  serial  asso- 
ciations that  the  shareholders  who  carry  their  shares  to 
maturity  are  only  a  small  fraction  of  the  number  which 
have  been  members  during  the  life  of  the  series.  Those 
shareholders  who  withdrew  before  the  maturity  of  their 
shares  were  required  to  forfeit  and  leave  to  the  associa- 
tion a  greater  or  less  portion  of  the  profit  which  their 
share  had  actually  earned  prior  to  withdrawal. 

The  foregoing  facts  are  recognized  in  the  permanent 
plan.  The  operation  of  the  association  is  adjusted  to 
meet  the  individual  needs  of  the  several  members.  There 
is  no  time  fixed  at  which  the  share  issued  to  any  member 
shall  mature  or  at  which  he  is  required  to  withdraw  and 
sever  his  connection  with  the  association.  In  this  way 
there  is  no  fixed  time  at  which  a  large  amount  of  with- 
drawals must  be  met.  But  each  member  is  at  liberty  to 
withdraw  all  or  any  part  of  his  credit  with  the  association, 
whenever  he  may  have  need  for  the  same.  This  feature 
of  the  permanent  plan  is  one  of  the  chief  factors  which 
has  developed  the  growth  of  the  associations  operating 
on  this  plan,  and  is  the  chief  reason  for  their  growth  to 
such  unusual  size  and  large  resources. 

[lOOj 


PLANS  OF  ASSOCIATIONS. 

The  real  value  and  usefulness  of  an  individual  to  his 
community  can  not  be  measured  by  his  bank-account, 
for  there  are  so  many  ways  by  which  an  individual  can 
be  useful  and  helpful  through  his  personal  influence  and 
the  value  of  his  example  apart  from  the  use  of  money. 
The  value  and  usefulness  of  a  financial  institution,  how- 
ever, such  as  a  bank  or  a  building  association,  which 
operates  only  through  its  resources  and  its  capital,  can 
be  very  accurately  measured  by  the  amount  of  money 
which  it  has  at  command.  The  value  of  such  an  institu- 
tion is  dependent  on  the  volume  of  business  done,  and 
this  in  turn  is  wholly  dependent  on  the  volume  of  its 
resources.  Such  an  institution  of  large  size  is  certainly 
of  greater  usefulness  than  it  could  be  if  its  resources 
were  small  and  trifling. 

Under  the  serial  plan,  at  the  maturity  of  a  series,  many 
of  the  shareholders  who  have  no  immediate  use  for  this 
money  and  would  prefer  to  leave  it  in  the  care  of  the 
association,  are,  by  the  rules  under  which  the  association 
is  operated,  required  to  accept  their  savings  and  seek 
other  investments  for  it,  while  at  the  same  time  other 
would-be-borrowers  are  impatiently  waiting  to  have  the 
association  fill  their  application  for  loans  by  which  they 
may  buy  or  build  a  home. 

This  permanent  plan  adapts  the  operation  of  a  build- 
ing association  to  the  actual  needs,  conditions  and  pos- 
sible emergencies  of  each  individual  associated  with  it. 
The  introduction  of  this  plan  marks  the  beginning  of 
a  much  greater  general  popularity  of  building  associa- 
tions. Since  its  introduction  they  have  sprung  up  in 
large  numbers  in  all  sections.  Many  hundreds  of  associa- 
tions have  been  organized  and  launched  on  this  plan,  and 
hundreds  of  .serial  associations  have  adojjtcd  that  plan 
and  changed  to  the  permanent  type.  The  uniform  suc- 
cess, rapid  growth  and  great  popularity  attained  by  this 

[101] 


CHAPTER  VIL 

type  seems  to  indicate  that  this  will  become  the  general 
standard  form  which  building'  and  loan  associations  will 
adopt.  The  simplicity  of  tlie  plan  makes  it  very  easy  to 
be  understood  by  the  average  member.  One  of  the  great- 
est factors  in  its  popularity  is  the  extreme  simplicity  and 
freedom  from  unnecessary  work  and  labor  in  the  system 
of  book-keeping  and  accounting  which  this  type  of  asso- 
ciation makes  possible.  Doubtless  future  experience  will 
develop  many  further  marked  changes  and  improvements 
in  this  plan. 

Arguments  Favoring  the  Permanent  Plan. 

In  an  address  in  favor  of  the  permanent  plan,  before 
the  United  States  League,  Mr.  K.  V.  Haymaker,  of  De- 
fiance, Ohio,  made  the  following  arguments.  After  dis- 
cussing the  features  of  the  terminating  plan,  Mr.  Hay- 
maker said : 

"It  was  soon  discovered  that  at  intervals  during  the  progress 
of  the  association,  outsiders  would  be  glad  to  subscribe  for  shares 
and  enjoy  the  profits  and  benefits  afforded  by  this  equitable  form  of 
co-operation.  This  terminating  association,  however,  offered  but 
one  equitable  plan  on  which  new  shares  could  be  subscribed  during 
the  progress  of  the  association ;  that  was  for  the  new  members  at 
the  time  of  subscribing  for  shares  to  pay  in  a  sum  equal  to  all  the 
dues  on  the  share  subscribed  for  the  full  time  elapsed  since  the  date 
of  organization,  and  an  additional  sum  equal  to  a  pro  rata  share 
of  the  accumulated  earnings  of  the  association  up  to  the  date  of  his 
subscription. 

It  frequently  happened  that  persons  thus  desirous  of  taking 
shares  found  themselves  unable  to  pay  the  back  dues  and  accumu- 
lated profits,  although  they  could  easily  afford  to  begin  at  that 
date,  and  thereafter  pay  the  regular  dues.  The  older  the  association 
grew,  the  more  difficult  and  expensive  it  became  for  new  members 
to  take  stock;  the  result  being  that  this  feature  of  associations  on 
this  plan,  necessarily  and  inevitably  limited  the  growth  and  useful- 
ness of  the  association  to  the  members  who  joined  at  the  commence- 
ment or  shortly  thereafter.  The  inflexible  plan  of  the  association 
on  one  hand  and  the  poverty  of  prospective  members  on  the  other, 
kept  such  association  weak,  puny  and  short-lived. 

[102] 


PLANS  OF  ASSOCIATIONS. 

There  was  but  one  method  under  this  plan  by  which  an  outside 
party  could  enjoy  the  benefits  of  the  building  association  scheme; 
that  was  to  gather  together  a  number  of  individuals  in  the  same 
situation  as  himself  and  organize  a  new  association.  It  was  a  very 
natural  and  logical  step  in  the  line  of  progress,  and  required  but 
very  little  change  in  the  plan  to  invent  the  'serial'  system  of  prolong- 
ing the  life  and  extending  the  influence  of  the  terminating  associa- 
tion. The  officers,  managers,  directors  and  all  the  necessary  mar 
chinery  for  the  conduct  of  a  new  association  were  already  organized, 
and  in  working  order  managing  the  affairs  of  the  old  one.  Without 
greatly  increasing  their  labors  the  same  officers  could  readily  man- 
age two  or  more  associations ;  and  so  it  came  about  that  when  an 
association  had  reached  the  age  that  made  it  difficult  and  expensive 
for  new  members  to  join  it,  it  became  the  natural  and  logical  step 
for  the  officers  of  the  association  to  heed  the  demand  of  their  neigh- 
bors for  additional  accommodations  in  this  line,  and  organize  a  new 
association  to  be  conducted  by  them  precisely  as  the  original  asso- 
ciation had  been  run;  and  this  in  time  to  be  supplemented  by  a 
third,  and  so  on.  The  serial  plan  being  in  brief,  a  confederation  of 
terminating  associations. 

By  thus  prolonging  the  life  of  an  association  and  extending  its 
influence  and  increasing  its  membership,  a  vast  widening  of  useful- 
ness was  accomplished ;  the  introduction  of  the  serial  plan  marks 
a  distinct  epoch  in  the  evolution  of  the  building  and  loan  system. 

This  serial  plan  was  the  natural  outgrowth  demanded  by  the 
evils  and  inconvenient  features  of  the  original  terminating  plan. 
Among  these  objectionable  features  which  seriously  interfered  with 
the  usefulness  of  these  institutions  and  hedged  their  growth  within 
narrow  limits,  was  the  fact  that  this  scheme  contemplated  uniform 
payments  among  all  the  membership  in  proportion  to  the  shares 
they  respectively  held. 

In  case  the  stockholder  should  later  on  find  himself  in  a  position 
where  he  could  easily  make  greater  contributions,  or  carry  a  greater 
number  of  shares,  the  rigid,  inflexible  plan  of  the  association  made 
it  extremely  difficult  for  him  to  avail  himself  of  such  privilege.  Or, 
on  the  other  hand,  in  case  he  found  that  he  had  overestimated  his 
ability  to  carry  shares  and  that  he  had  assumed  a  greater  burden 
than  he  could  sustain,  it  became  still  more  inconvenient  and  difficult 
to  adjust  his  payments  to  his  reduced  circumstances  without  serious 
loss.  In  short,  this  plan  offered  no  inducement  to  a  member  to  save 
more  money  than  his  agreement  contemplated,  and  at  the  same 
time  made  it  compulsory  for  him  to  keep  up  his  required  payments 

[1031 


CHAPTER  VII. 

even  tliouyh  he  found  later  on  that  it  would  be  an  intolerable 
burden  for  him  to  do  so. 

.-\nothcr  serious  objection  to  this  terminating  plan  was  the  fact 
that  it  contemplated  that  each  stockholder  should  at  some  time  be- 
come a  borrower  from  the  association ;  and,  of  course,  none  but 
stockholders  could  be  borrowers.  It  frequently  occurred  that  in 
such  associations  many  of  the  members  did  not  require  loans ;  and 
if  such  members  happened  to  be  numerous  the  funds  of  the  associa- 
tion would  accumulate  and  lie  idle,  after  those  desiring  loans  had 
been  accommodated,  because  none  of  the  membership  had  use  for 
the  money.  To  obviate  this  difficulty  such  associations  usually  de- 
termined by  lot,  which  of  the  non-borrowing  members  should  be 
required  to  withdraw  their  shares  and  receive  their  money,  even 
though  such  member  preferred  not  to  do  so.  Thus  the  association 
wx>uld  find  its  assets  reduced  by  the  shares  thus  forced  to  withdraw 
and  by  the  funds  thus  paid  over  to  a  member  who  did  not  desire 
his  money  at  the  time ;  while  in  the  community  there  were  doubtless 
many  persons  not  members  who  would  have  been  glad  of  the  oppor- 
tunity of  borrowing  the  funds,  but  were  debarred  from  doing  so 
by  the  burdensome  conditions  with  which  they  were  required  to 
comply  before  they  could  become  stockholders  of  the  association 
and  be  entitled  to  the  privilege  of  borrowing.  In  some  cases  shares 
thus  forced  out  were  not  given  their  entire  pro  rata  portion  of  the 
profits  already  accumulated,  but  -were  allowed  an  arbitrary  bonus 
somewhat  less  than  a  pro  rata  share  of  the  profits.  In  other  cases 
the  idle  funds  were  disposed  of  by  offering  a  bonus  above  the  pix> 
rata  share  of  earnings  as  an  inducement  to  members  to  withdraw 
voluntarily.  The  result  in  each  case  was  equally  unsatisfactory ;  the 
first  plan  being  unjust  to  the  withdrawing  members,  and  the  other 
being  unjust  to  the  remaining  members. 

The  serial  plan  does  not  abolish  or  obviate  these  difficulties,  but 
merely  mitigates  them  in  a  degree,  and  renders  them  slightly  less 
objectionable.  Most  serial  associations  have  adopted  a  feature  which 
is  a  great  improvement  on  the  terminating  plan,  viz :  in  serial  asso- 
ciations it  is  now  usual  to  distribute  the  profits  and  credit  them 
up  to  the  shares  either  annually  or  semi-annually  instead  of  keep- 
ing them  undistributed  until  the  series  terminates.  Each  series 
of  stock  runs  independent  of  the  others  and  each  has  its  own  time 
of  maturing.  New  members  are  only  required  to  pay  back  dues 
from  the  date  of  the  issue  of  the  series  which  he  joins,  and  all  the 
shares  of  a  series  are  thus  kept  of  equal  value.  The  serial  plan, 
however,  retains  one  objectionable  feature  of  the  terminating  asso- 

[104] 


PLANS  OF  ASSOCIATIONS. 

ciation  which  necessarily  limits  the  growth  and  narrows  the  field 
which  they  occupy. 

Under  this  plan  each  member  becomes  one  of  a  class  with  whom 
he  must  keep  even  step  during  the  life  of  the  series  to  which  his 
stock  belongs.  He  must  not  pay  more  than  his  regular  dues,  for 
that  would  disturb  the  equal  value  of  the  shares,  and  he  must  not 
become  delinquent  for  the  same  reason.  He  must  gauge  his  pay- 
ments, not  by  his  own  circumstances  and  ability  to  pay,  but  by  what 
his  co-members  in  his  series  are  paying.  He  must  simply  keep  step 
with  the  procession ;  being  neither  allowed  to  quicken  his  pace  nor 
lag  behind. 

All  the  shares  of  each  series  mature  at  the  same  time,  and  at 
maturity  the  association  is  expected  to  pay  off  all  the  shares  in 
the  series  at  their  par  value.  This  brings  us  to  one  of  the  most 
perplexing  problems  which  confront  the  managers  of  the  serial 
association.  Whenever  you  find  a  meeting  of  the  building  associa- 
tion men  gathered  together,  if  their  companies  are  organized  on  the 
serial  plan,  you  will  find  a  great  portion  of  their  time  spent  in  dis- 
cussing the  various  plans  by  which  they  can  liquidate  and  pay  off 
the  matured  series  with  the  least  trouble,  annoyance  and  loss.  To 
such  associations  it  is  doubtless  a  problem  of  sufficient  gravity  to 
deserve  all  the  time  and  attention  which  is  devoted  to  it.  It  is  easy 
to  understand  the  gravity  of  the  situation  when  officers  of  the  build- 
ing associations  are  looking  forward  to  a  date  in  the  near  future 
when  a  series  of  stock  is  approaching  maturity,  aggregating,  say 
three  or  four  hundred  shares  with  a  par  value  of  thirty  or  forty 
thousand  dollars,  and  contemplate  the  fact  that  this  amount  of 
cash  must  be  in  the  treasury  at  the  appointed  time.  The  mere 
question  of  raising  and  accumulating  this  large  fund  is  a  problem 
not  always  easy  of  solution,  and  aside  from  this,  there  are  other 
phases  of  the  question  which  add  to  the  complication.  For  weeks, 
perhaps  months  ahead,  funds  must  be  retained  in  the  treasury  in- 
stead of  being  used  to  fill  pending  applications  for  loans.  This  idle 
money  earns  nothing.  The  association  is  deprived  of  the  profits 
which  this  fund  might  otherwise  earn  during  the  weeks  and  months 
it  is  being  accumulated.  Or,  suppose  an  association  borrows  the 
funds  to  meet  a  matured  series  instead  of  hoarding  its  receipts 
for  the  purpose.  In  such  case  the  result  is  alike,  unprofitable.  The 
borrowed  money  draws  interest  which  the  association  must  pay. 
In  any  aspect  of  the  case  the  certainty  of  being  required  to  pay  so 
large  an  amount  of  money  at  a  time  certainly  presents  most  dis- 
agreeable and  perplexing  dilemmas  to  a  building  association. 

[106J 


CHAPTER  VII. 

All  these  objections  and  difficulties  and  problems  which  are  so 
annoying  and  perplexing  and  which  so  limit  and  circumscribe  the 
business  of  the  terminating  and  serial  associations  fade  away  and 
disappear  or  at  least  lose  all  their  terrors  in  associations  issuing 
stock  on  a  permanent  plan. 

In  conducting  the  building  association  under  this  plan,  persons 
are  permitted  to  subscribe  stock  at  any  time.  Each  stockholder's 
shares  are  treated  as  a  separate  series,  and  an  account  is  kept  with 
each  member  of  the  dues  paid  in  by  him  on  his  stock  and  of  the 
dividends  to  which  he  is  entitled  at  each  annual  or  semi-annual  dis- 
tribution of  profits.  In  the  development  and  conduct  of  associations 
under  this  plan  in  Ohio,  building  association  managers  have  learned 
that  the  more  liberally  and  equitably  an  association  can  treat  its 
membership,  and  the  more  privileges  are  extended  to  them,  the 
more  popular  and  successful  the  association  proves  to  be.  Under 
this  plan  of  liberal  treatment  and  the  extension  of  privileges  to 
members,  many  of  the  old  practices  and  customs  which  were  sup- 
posed to  be  essential  to  building  association  management  have  en- 
tirely disappeared.  Among  these  may  be  mentioned  the  fact  that 
few  associations  in  Ohio  exact  any  membership  or  initiation  fee 
from  persons  subscribing  for  stock.  The  charge  of  a  nominal  sum, 
usually  twenty-five  cents  for  a  pass-book,  is  the  only  remnant  of 
the  old  practice  of  demanding  an  initiation  fee  of  so  much  per 
share.  Then  again,  the  practice  of  compelling  non-borrowing  mem- 
bers to  keep  up  their  regular  dues  by  imposing  a  fine  for  each 
deHnquency  is  fast  disappearing.  A  large  and  increasing  number 
of  our  associations  have  entirely  abolished  the  practice  of  imposing 
fines  upon  delinquent  depositing  members.  These  stockholders  are 
permitted  to  regulate  their  payments  by  their  own  convenience  and 
the  circumstances  in  which  they  may  find  themselves.  They  are 
permitted  to  pay  in  excess  of  their  regular  dues  or  to  pay  less  or  to 
cease  paying  altogether  if  they  so  desire.  We  have  found  that  it  is 
a  fixed  principle  in  human  nature,  that  when  an  individual  is  driven 
to  a  certain  course  of  procedure  through  a  fear  of  punishment,  even 
though  that  punishment  be  merely  the  assessment  of  a  fine  by  a 
building  and  loan  association,  his  duty  will  be  done  grudgingly, 
unwillingly  and  with  a  bad  grace. 

The  American  people  dislike  to  be  driven,  and  the  feeling  that 
membership  in  a  building  association  will  compel  a  man  to  maintain 
his  payments  regularly  will  result  in  keeping  more  men  out  of 
membership  entirely,  and  will  result  in  greater  loss  in  business 
to  an  association  than  all  it  can  possibly  gain  from  a  rigid  enforce- 

[106] 

i 


PLANS  OF  ASSOCIATIONS. 

ment  of  fines  upon  delinquent  members.  Hence  the  idea  has  taken 
root,  and  is  rapidly  spreading  among  our  permanent  associations  of 
permitting  the  widest  liberties  to  stockholders,  in  the  matter  of  the 
amount  and  times  of  their  payments.  In  distributing  the  dividends 
to  stockholders  the  basis  on  which  it  is  figured  and  credited  up  to 
the  individual  members  is  the  sum  which  the  several  members  have 
actually  paid  in  and  which  remains  to  their  credit.  Stockholders 
very  soon  learn  that  their  share  of  the  dividends  depends  upon  the 
amount  of  their  payments  and  the  result  is  that  in  those  associations 
which  are  thus  liberal  to  their  members,  the  majority  of  them  pay 
their  shares  far  in  advance,  and  the  delinquent  depositor  is  the  ex- 
ception rather  than  the  rule. 

The  borrowers  are  treated  in  a  manner  almost  equally  liberal. 
The  minimum  payments  which  borrowers  are  required  to  pay  are 
fixed  at  a  small  sum,  usually  twenty-five  cents  per  week  on  each 
one  hundred  dollars  of  loan.  This  payment  covers  interest,  premium, 
and  a  portion  to  apply  on  their  stock.  This  required  minimum 
payment  gives  the  borrower  from  ten  to  twelve  years  in  which 
to  pay  of?  his  loan. 

He  is,  however,  at  liberty  to  pay  at  any  time  any  additional  sums 
in  excess  of  this  required  payment,  which  his  circumstance  and  in- 
clination may  enable  him  to  pay.  The  field  is  left  open  for  each  bor- 
rower to  do  the  very  best  he  can,  and  discharge  his  entire  indebted- 
ness, or  any  part  of  it,  whenever  it  suits  his  convenience.  The  pay- 
ment of  this  minimum  amount  by  the  borrower  is  enforced  by  the 
assessment  of  a  small  fee  for  delinquency.  Any  extra  sum  paid 
in  excess  of  the  required  minimum  payment  is  credited  to  him  as 
payments  in  advance,  and  he  is  not  treated  as  delinquent  until  the 
time  has  elapsed  for  which  these  extra  sums  paid  the  dues  in  ad- 
vance. 

These  provisions  prove  a  great  incentive  to  the  average  borrower 
to  pay  more  than  his  regular  dues,  and  pay  off  his  loans  as  rapidly 
as  his  circumstances  will  permit.  Of  course,  it  is  understood  that 
the  borrower  participates  in  the  dividend  the  same  as  the  non- 
borrower,  the  basis  on  which  his  dividend  is  figured  being  the  sum 
of  his  payment,  less  the  amount  deducted  therefrom  from  interest, 
premium,  fines,  etc. 

These  associations  also  accumulate  and  maintain  a  reserve  fund 
for  the  payment  of  contingent  losses.  This  is  now  made  compulsory 
on  all  permanent  associations  by  the  statutes  of  Ohio,  which  require 
that  at  least  five  per  cent,  of  the  net  earnings  of  each  year  be  set 
aside  for  the  funds  of  contingent  losses,  until  such  fund  shall  equal 

11071 


CHAPTER  VII. 

at  least  five  per  cent  of  th-c  outstanding  loans.  The  balance  of  the 
earnings,  after  paying  the  expenses,  are  distributed  among  the  stock- 
holders pro  rata  in  proportion  to  the  amount  paid  in  on  their  stock. 
The  fact  that  the  permanent  plan  of  building  associations  deals 
with  each  stockholder  individually,  and  not  with  a  number  of  stock- 
holders as  a  group,  permits  such  associations  to  deal  with  the  great- 
est liberality  with  their  membership  in  the  matter  of  withdrawals. 
The  stockholder  is  not  only  permitted  to  consult  his  own  convenience 
in  regard  to  the  time  and  amount  of  his  deposits  or  stock  payments, 
but  he  is  also  allowed  the  same  discretion  and  liberal  treatment  in 
regard  to  the  withdrawal  of  the  payments  he  has  made  on  his 
stock.  He  is  permitted  to  continue  his  payments  until  his  stock 
has  matured,  and  even  then,  if  he  so  desired,  he  can  permit  his 
money  to  remain  in  the  association,  until  such  time  as  he  may  have 
need  for  it.  In  case,  however,  he  should  at  any  time  desire  to  with- 
draw a  portion  of  his  stock  payment,  or  all  of  it,  he  is  permitted 
to  do  so,  usually  upon  demand.  Associations  protect  themselves, 
however,  by  a  provision  in  their  by-laws,  which  is  in  substance  as 
follows : 

'Members  may  withdraw  all  or  any  part  of  the  money 
paid  upon  stock  subscriptions  at  any  time  by  giving  notice 
to  the  secretary,  and  liability  to  make  further  payments 
on  the  stock  and  right  to  further  dividends  shall  cease  with 
such  notice.  When  such  withdrawal  is  totaled  the  with- 
drawing member  shall  be  entitled  to  receive  all  payments 
made  upon  the  stock  withdrawn,  and  all  dividends  declared 
thereon  up  to  the  date  of  notice;  provided,  that  if  the 
applications  for  withdrawal  at  any  time  exceed  the  weekly 
receipts,  such  applications  shall  be  filed  in  the  order  in  which 
they  are  received  and  paid  in  the  order  in  which  they  are 
filed,  as  fast  as  the  weekly  receipts  will  pay  them.' 

This  permanent  plan,  which  permits  a  stockholder  to  deposit 
his  money  at  such  times  and  in  such  amounts  as  may  suit  his  con- 
venience or  ability,  which  ,also,  permits  him  to  withdraw  his  pay- 
ments and  accumulated  profits  whenever  he  desires  to  do  so;  to- 
gether with  that  feature  of  the  plan  which  permits  new  members 
to  subscribe  for  stock  at  any  time,  produces  this  result:  it  frees  these 
associations  entirely  from  that  dreaded  experience  of  serial  associa- 
tions ;  that  of  having  to  meet  and  pay  oflF  an  entire  series  of  stock 
at  one  time.  The  applications  for  withdrawal  come  in  at  irregular 
intervals,  some,  perhaps  every  week.    The  usual  experience  is,  how- 

[108] 


PLANS  OF  ASSOCIATIONS. 

ever,  that  these  applications  can  easily  and  conveniently  be  paid 
from  the  regular  weekly  receipts  and  still  leave  over  a  margin 
which  the  association  can  loan  out.  If  it  should  occasionally  happen, 
as  it  is  almost  sure  to  do,  that  the  applications  for  withdrawal 
exceed  the  weekly  receipts,  the  difficulty  is  easily  and  smoothly 
remedied  by  suspending  the  making  of  loans  for  a  short  period, 
imtil  the  application  withdrawals  are  satisfied. 

It  would  seem  to  require  no  argument  to  prove  that  an  associa- 
tion will  be  most  prosperous  where  the  receipt  and  disbursement  of 
funds  continues  in  a  steady,  regular  flow,  without  spasmodic  intervals 
where  enormous  sums  must  be  met  at  one  time.  Such  events  inter- 
rupt the  regular  course  of  business  and  cannot  be  beneficial.  Of 
course,  under  the  permanent  plan  large  sums  in  the  aggregate  may 
be  demanded  on  withdrawal  applications,  but  the  plan  of  requiring 
such  applications  to  be  filed  and  paid  in  regular  order  from  the 
receipts  of  the  associaition,  forfeiting  all  share  of  the  earnings  from 
the  date  of  such  notice,  enables  the  association  to  mieet  such  con- 
tingencies without  loss. 

It  is  a  disagreeable  state  of  affairs  to  have  the  application  for 
withdrawal  exceed  the  weekly  receipts.  So  very  undesirable  is 
such  a  contingency  that  to  us  it  seems  almost  folly  to  embody  in 
the  plan  itself  features  which  make  it  absolutely  certain  that  at 
frequent  intervals  the  association  will  be  required  to  meet  demands 
largely  in  excess  of  the  ordinary  receipts. 

Permanent  associations  usually  provide  in  their  by-laws  that 
stock  withdrawn  between  dividend  days  receives  no  part  of  the 
earnings  accumulated  since  the  last  dividend  was  declared.  Since 
this  is  usually  a  larger  sum  of  money  than  the  money  would  earn  for 
the  association  during  the  time  they  are  accumulating  money  to 
meet  withdrawals,  the  association  realizes  a  profit  on  funds  thus 
withdrawn,  instead  of  suffering  a  loss  such  as  serial  associations 
are  required  to  stand  while  accumulating  funds  to  meet  the  with- 
drawal of  a  whole  series. 

The  entire  plan  of  this  permanent  building  and  loan  system  is 
simple,  logical  and  rt-asonable.  It  makes  each  stockholder  practi- 
cally independent  of  his  fellows.  If,  in  a  group  of  stockholders, 
one  should  prove  more  successful,  more  enterprising,  or  more 
economical  than  his  fellows,  and  should  evidence  these  traits  by 
larger  payments  upon  his  stock  subscription,  he  receives  his  reward 
in  a  larger  portion  of  the  profits  each  dividend  day  and  is  not 
restricted  and  hampered  by  his  less  enterprising  or  more  extravagant 
neighbor  and  co-member,  who  may  prefer  to  waste  his  substance  in 

[1091 


CHAPTER  VII. 

riotous  living  rather  than  accumulating  in  a  building  and  loan  asso- 
ciation. Each  member  is  rewarded  in  the  exact  proportion  to  the 
economy  and  self-denial  which  he  practices  and  the  faithfulness 
with  which  he  keeps  up  his  required  payments  or  the  enterprise  with 
which  he  pays  more  than  the  required  sum.  When  a  member  fails 
or  ceases  to  pay  he  is  not  punished  for  the  default ;  his  dividends 
do  not  increase ;  they  remain  at  the  same  figure  each  dividend  day 
until  he  again  resumes  his  payments. 

Reference  has  been  made  only  to  some  of  the  leading  features 
which  seem  to  make  the  permanent  plan  of  issuing  stock  in  a  build- 
ing and  loan  association  far  superior  to  any  other  plan  that  has 
j'et  been  devised.  The  friends  of  this  system  do  not  claim  that  it 
has  reached  perfection,  or  that  it  is  without  faults,  but  they  do 
claim  that  it  possesses  many  points  of  excellence,  which  render 
it  far  superior  to  the  serial  plan.  There  is  one  test,  however,  which 
should  decide  the  contest,  and  from  which  there  seems  to  be  no 
appeal,  and  that  is  the  test  of  experience.  To  this  test  the  friends 
of  the  permanent  plan  gladly  submit  the  question  for  decision. 

The  friends  of  this  system  of  issuing  stock  confidently  commend 
it  to  the  building  and  loan  associations  everywhere,  believing  that  the 
introduction  of  this  system  will  widen  the  field,  extend  the  influence, 
and  render  more  popular  the  building  and  loan  system  of  accumu- 
lating and  investing  money,  and  believe  that  the  extension  of  the 
building  and  loan  system  will  have  a  beneficial  effect  in  many  ways, 
and  will  tend  in  great  measure  to  solve  happily  many  vexed  prob- 
lems which  now  disturb  society,  and  even  threaten  the  life  of  our 
government  itself." 

Withdrawal  Rules. 

The  withdrawal  rules  adopted  by  building  associations 
present  many  differences  and  varieties.  In  terminating 
and  serial  associations  it  frequently  occurs  that  members 
withdrawing  within  two  years  after  joining  shall  receive 
the  money  that  they  have  paid  in,  without  any  share  of 
the  profits;  withdrawals  during  the  third  year  to  receive 
lo  per  cent  of  the  profits;  fourth  year,  20  per  cent,  and 
so  on,  under  which  rules  a  withdrawing  member  would 
not  receive  the  full  share  of  profits  his  money  had  earned 
after  the  eighth  year.    Very  strong  reasons  are  advanced 

[110] 


PLANS  OF  ASSOCIATIONS. 

for  this  deduction.  The  loans  in  which  the  money  has 
been  invested  still  has  several  years  to  run,  and  losses 
might  occur,  of  which  the  withdrawing  member  would 
be  entirely  relieved,  and  the  entire  burden  of  the  loss 
would  fall  upon  the  remaining  shareholders;  hence  it 
seems  very  proper  that  the  withdrawing  stockholder 
should  be  required  to  leave  some  part  of  the  earnings 
of  his  stock,  as  a  protection  to  the  remaining  stockholders 
against  such  contingent  losses. 

The  practical  application  of  this  rule,  however,  demon- 
strated that  usually  the  sum  deducted  was  more  than  that 
required  to  cover  the  losses  which  actually  occurred,  and, 
as  a  result,  the  profits  from  this  source  enabled  the  asso- 
ciation to  pay  to  the  continuing  stockholders  at  the  ma- 
turity of  their  series  a  rate  of  profit  or  dividend  greater 
than  the  rate  of  interest  drawn  on  the  associations  mort- 
gage loans.  This  explains  why  associations  on  that  plan 
frequently  state  that  their  borrowers  pay  6  per  cent  inter- 
est, and  their  investors  get  6^  per  cent  or  7  per  cent 
dividends.  This  statement  only  means  that  the  persistent, 
continuing  stockholders  who  remain  until  the  maturity  of 
the  series  receive  dividends  at  that  rate,  and  that  the 
larger  number  in  every  series  who  withdraw  prior  to 
maturity,  in  fact  receive  a  much  lower  rate  of  profit  on 
their  investment. 

In  permanent  associations,  the  withdrawal  rules  usually 
provide  that  a  holder  of  unpledged  shares  may  withdraw 
all  or  any  part  of  the  credit  on  his  shares  at  any  time, 
without  notice;  but  it  provides  also  that  the  association 
may  reciuire  notice  of  withdrawal  at  any  time,  which 
notices  shall  be  filed  in  the  order  in  which  they  are  given, 
and  paid  in  the  order  in  which  they  are  filed,  as  fast 
as  fifty  per  cent  of  the  receipts  of  the  association  will 
pay  them.  They  further  ])rovi(le  that  the  directors  may 
use   a   larger    portion    of    the    receipts   at    any    time   to 


CHAPTER  VII. 

pay  withdrawals.  A  member  who  withdraws  his  entire 
accxnint  shall  receive  the  entire  sum  to  his  credit,  including 
payments  made  and  dividends  declared,  less  his  pro  rata 
share  of  the  losses  of  the  association  in  excess  of  the 
reserve  accounts  and  undivided  pn)fits  of  the  association. 
Under  this  rule,  each  member  receives  all  the  net  profit 
which  his  investment  has  earned.  This  seems  just  and 
equitable,  since  it  would  be  manifestly  unfair  to  deprive 
any  member  of  the  full  profit  which  his  investment  has 
earned,  and  use  it  to  swell  the  profits  of  other  members 
whose  investments  did  not  earn  it. 

Reserve  Fund. 

The  creation  of  a  reserve  fund,  or  a  contingent  fund  to 
protect  the  association  from  losses  which  might  be  sus- 
tained, is  a  comparatively  modern  development,  and  did 
not  exist  in  the  early  as.sociations.  Indeed,  under  the 
early  plan  upon  which  associations  were  operated,  such  a 
separate  fund  was  not  needed,  since  in  the  early  days 
all  the  profits  were  kept  together  and  undistributed  until 
the  termination  of  the  association  or  the  maturity  of  the 
series;  and  any  losses  which  might  be  sustained  were 
charged  as  they  occurred  against  the  aggregate  profits. 

When,  in  the  evolution  of  the  plan,  serial  associations 
began  the  practice  of  making  periodic  distribution  of 
earnings,  many  of  them  adopted  the  plan  of  creating  a 
reserve  fund,  as  a  protection  against  losses,  and  this  prac- 
tice is  still  observed  by  many  serial  associations. 

The  creation  and  maintenance  of  a  reserve  fund  is  a 
very  essential  feature  in  the  permanent  plan.  In  most 
of  the  States,  where  the  permanent  plan  prevails,  the 
creation  of  a  reserve  fund  for  contingent  losses,  is  made 
compulsory  by  statute.  The  Ohio  statute  provides  that 
permanent  associations  shall  either  annually  or  semi- 
annually set  aside  at  least  5  per  cent  of  the  net  profits 

11121 


PLANS  OF  ASSOCIATIONS. 

to  a  fund  for  contingent  losses,  and  that  this  fund  can 
not  be  used  for  any  other  purpose  than  the  payment  of 
such  losses. 

The  existence  of  a  reserve  fund  does  much  to  regulate 
and  stabilize  the  operation  of  a  building  association  and 
to  keep  its  rate  of  dividend  constant  and  uniform.  It 
becomes  a  sort  of  insurance  to  guarantee  the  safety  of 
investors  and  to  assure  them  of  the  regularity  of  their 
dividends.  However  careful  and  conservative  a  board 
of  directors  may  be  in  conducting  the  affairs  of  an  asso- 
ciation, it  is  almost  certain  that  at  some  time  during  its 
career  it  will  suffer  losses,  and  it  would  seem  to  be  a  wise 
provision  to  accumulate  a  reserve  fund  in  moderate 
amounts  from  time  to  time  through  the  life  of  the  asso- 
ciation, from  which  these  losses  might  be  paid,  rather 
than  that  the  entire  burden  should  fall  upon  the  members 
belonging  at  the  time  the  fact  of  loss  is  ascertained. 

It  is  a  well-established  principle  that  this  reserve  fund 
is  for  the  protection  of  the  entire  membership  of  the 
association,  and  that  withdrawing  members  and  holders 
of  matured  stock  are  not  entitled  to  demand  any  part 
thereof  when  they  sever  their  relations  and  withdraw 
from  the  association. 

The  question  is  sometimes  asked:  "What  disposition 
will  be  made  of  this  reserve  fund  when  the  association 
liquidates  and  goes  out  of  business?"  The  answer  to 
this  query  is  that  so  long  as  an  association  is  successful 
and  prosperous  there  is  no  reason  why  it  should  liqui- 
date and  go  out  of  business.  It  is  doubtful  if  any  serial 
or  permanent  association  has  ever  liquidated  and  gone 
out  of  business  while  it  was  yet  successful  and  prosper- 
ous. The  only  reason  for  such  a  step  would  be  found 
in  the  fact  that  the  association  had  met  with  losses  and 
become  insolvent  and  for  that  reason  should  be  wound  up. 
When  that  condition  exists  the  reserve  fund,  would  of 

[1131 


CHAPTER  VII. 

course,  be  applied  to  meet  the  losses  and  when  the  time 
of  liquidation  arrived  there  would  be  no  reserve  fund  left, 
over  which  to  quarrel. 

The  amount  of  a  reserve  fund  which  an  association 
is  permitted  or  required  to  accumulate  is  a  problem 
worthy  of  consideration.  In  some  states  the  statutes  fix 
a  minimum,  and  require  the  accumulation  of  a  reserve 
fund  by  regular  periodic  additions  thereto  until  this 
minimum  amount  is  reached.  In  other  States  the  statutes 
fix  a  maximum,  and  forbid  the  association  accumulating 
a  reserve  fund  above  that  amount.  The  Ohio  law  has 
fixed  the  minimum  at  5  per  cent  of  the  total  assets.  The 
Illinois  statute  provides  that  no  less  than  i  per  cent  or 
more  than  5  per  cent  of  the  net  profits  shall  at  each 
periodic  apportionment  be  set  aside  as  a  guarantee  or 
contingent  fund,  until  such  fund  amounts  to  5  per  cent 
of  the  dues  capital,  and  it  shall  thereafter  be  maintained 
at  no  less  than  5  per  cent  nor  more  than  10  per  cent 
of  the  dues  capital. 

The  amount  set  aside  to  this  reserve  fund  should,  of 
course,  not  exceed  the  maximum  stipulated  in  the  statute 
and  where  no  such  maximum  is  fixed,  it  would  be  unwise 
for  an  association  to  accumulate  a  reserve  fund  unreason- 
able in  amount,  or  to  apply  for  that  purpose  so  large  a  por- 
tion of  the  earnings  as  would  materially  interfere  with  the 
regular  rate  of  dividend ;  and  while  a  case  has  never  been 
decided  in  any  court,  it  is  probable  that  a  court  of  equity 
would  interfere  with  any  unreasonable  accumulation  of 
a  reserve  fund  and  decree  a  distribution  of  so  much  there- 
of as  would  reduce  it  to  a  reasonable  figure. 

The  principles  involved  in  this  question  are  quite  ably 
discussed  and  fully  decided  in  the  case  of  Greeff  vs.  the 
Equitable  Life  Assurance  Society,  i6oth  New  York,  16, 
73d  American  State  Report  659,  in  which  case  the  court 
decided  that  common  business  prudence  required  the  ac- 

[114] 


PLANS  OF  ASSOCIATIONS. 

cumulation  of  a  reserve  fund  to  meet  possible  losses,  and 
so  long  as  this  reserve  fund  was  not  unreasonable  in 
amount,  the  retiring  member  was  not  entitled  to  have  it 
distributed.  In  that  case  the  court  decided  that  the  re- 
serve which  the  Equitable  had  accumulated  was  not  un- 
reasonable and  denied  the  right  of  the  retiring  policy- 
holder to  demand  and  receive  a  portion  thereof. 

Premiums. 

In  the  early  development  of  the  building  association 
plan,  the  premium  was  a  very  important  factor  in  its 
practical  operation.  The  funds  of  the  association  were 
accumulated  in  small  amounts  and  by  slow  degrees  and 
it  was  only  at  infrequent  intervals  that  a  sum  was 
large  enough  for  loan  purposes.  An  association  that 
had  funds  with  which  to  make  a  loan  usually  had 
numerous  members  who  desired  to  borrow,  greatly  in 
excess  of  the  funds  on  hand.  It  was  the  usual  practice 
to  put  this  money  up  for  sale  to  the  member  who  would 
bid  the  highest  premium.  This  competitive  bidding  fre- 
quently resulted  in  associations  receiving  very  high  prem- 
iums on  their  loans.  For  example,  suppose  an  associa- 
tion had  $i,ooo  in  its  treasury.  It  was  a  frequent  occur- 
rence for  members  to  bid  as  high  as  $200  premium  for 
the  privilege  of  borrowing  this  money.  In  such  cases 
the  borrower  would  give  his  mortgage  for  $1,000  and 
the  premium  bid  would  be  deducted  from  his  loan,  and  he 
would  receive  $800  in  cash,  and  the  $200  premium  be- 
ing at  once  passed  to  the  profit  and  loss  accounts  of  the 
association.  These  high  premiums  resulted  in  extremely 
high  profits  to  the  association,  but  as  time  passed  by  and 
the  termination  of  the  association  approached,  or  the 
series  to  which  the  money  belonged  drew  near  its  matur- 
ity, the  time  for  which  the  Ixjrrower  ci)uld  have  the  use 
of  the  money  was  correspondingly  shortened,  making  the 

[115] 


CHAPTER  VII. 

loan  less  desirable  and  attractive.  The  rate  of  premium 
bid  became  largely  reduced,  until  near  the  end  of  the  asso- 
ciation or  the  maturity  of  the  series  there  would  be  no 
demand  at  all  for  the  money.  The  natural  result  of  this 
system  was  that  associations  following  the  gross  premium 
plan,  as  this  was  called,  made  exorbitant  profits  in  the 
early  period  of  its  operation,  which  gradually  became  re- 
duced until  as  it  approached  its  end  the  current  profits 
rapidly  dwindled  away. 

The  gross  premium  plan  was  then  supplanted  by  the 
installment  premium  plan.  Under  this  plan  each  bor- 
rower would  bid  the  amount  of  premium  which  he  was 
willing  to  pay  with  each  installment  in  addition  to  his 
interest  and  dues.  This  was  a  great  improvement  over 
the  gross  premium  plan.  It  tended  greatly  to  stabilize 
the  operation  of  the  association,  and  to  render  the  profits 
more  constant  and  regular. 

As  associations  grew  in  strength  and  popularity  and 
increased  their  resources,  the  rate  of  installment  premiums 
rapidly  diminished  until  at  the  present  time  the  premium 
feature  has  entirely  disappeared  in  many  associations, 
and  in  those  in  which  it  still  is  retained  it  is  a  very  small 
and  trifling  factor. 

It  is  believed  that  the  gross  premium  plan  was  never 
used  or  followed  by  associations  operated  on  the  perma- 
nent plan.  Many  of  them  adopted  the  installment  plan 
of  premiums,  but  the  rate  of  premium  charged  has  been 
rapidly  reduced  and  in  a  large  majority  of  permanent  as- 
sociations has  been  abolished  entirely  and  the  cost  of 
loans  to  lx)rrowers  reduced  to  the  regular  interest  rate 
prevailing  in  the  community  where  they  operate. 

The  combined  sums  paid  by  the  borrowers  as  interest 
and  premium  in  the  early  days  of  the  association  develop- 
ment, frequently  amounted  to  a  rate  in  excess  of  the  legal 
rate  of  interest  in  the  State  in  which  they  were  operating. 

[116] 


PLANS  OF  ASSOCIATIONS. 

Most  of  these  States  provided  that  these  charges  should 
not  be  considered  usury,  in  view  of  the  fact  that  the  bor- 
rower who  paid  these  excesses  participated  in  the  result- 
ing profits,  and  for  this  reason  exempted  building  asso- 
ciations from  the  provisions  of  their  statutes  against 
usury. 

With  the  development  and  growth  of  the  building 
association  movement  and  the  resulting  decrease  in  the 
interest  paid  and  premiums  bid,  the  cost  of  building 
association  loans  in  most  communities  does  not  now  ex- 
ceed the  legal  rate  of  interest  in  the  States  in  which 
they  operate. 

The  rapid  rate  at  which  the  item  of  premiums  on 
loans  is  disappearing  is  clearly  shown  by  an  examination 
of  the  progress  in  the  State  of  Ohio.  The  report  for 
1891  shows: 

Total    receipts $30,349,000 

Premiums    476,529,  or  1^%  of  the  receipts 

The  report  for  19 19  shows: 

Total  receipts $336,485,000 

Premiums    180,648,  or  approximately  .005% 

The  examination  of  statistics  in  other  States  will  dis- 
close similar  facts. 

The  Charging  of  Fees. 

The  charging  of  fees  of  various  kinds  has  always  been 
a  marked  feature  of  building  associations.  These  have 
been  imposed  under  various  forms  and  pretexts,  such  as 
a  membership  fee,  charged  against  each  member  and  fre- 
quently against  each  share  for  which  he  subscribed ;  a 
transfer  fee,  charged  when  stock  was  transferred  from 
one  member  to  another;  a  cancellation  fee,  charged 
against  withdrawing  or  maturing  stock.  These  several 
fees  collected  by  the  association  produced  an  addition  to 

11171 


CHAPTER  VII. 

their  profits  derived  from  interest  on  loans  which  aided 
them  very  materially  in  defraying  the  expenses  of  organ- 
ization and  operation  of  the  institution. 

The  National  Building  and  Loan  Association. 

In  the  decade  from  1885  to  1895,  there  arose  a  system 
called  the  "National  Building  and  Loan  Association." 
These  institutions  adopted  the  name  of  building  associa- 
tion and  from  a  central  headquarters  extended  their  oper- 
tions  throughout  the  United  States.  Institutions  in  this 
system  invariably  exacted  extravagant  fees  from  its 
members  wherever  it  was  possible  for  them  to  find  any 
excuse  for  so  doing.  They  included  in  their  plan  all  the 
fees  which  local  associations  had  ever  imposed,  increased 
them  largely  in  amount,  and  in  addition,  made  the  com- 
mon practice  of  deducting  from  every  stock  payment  a 
certain  portion  which  they  applied  to  an  expense  fund. 
The  scandalous  charges  for  fees  and  expenses  which 
these  National  Associations  imposed  on  their  member- 
ship, resulted  in  legislation  in  most  of  the  States,  limiting 
and  regulating  the  fees  which  associations  are  permitted 
to  charge.  Some  of  these  reformatory  enactments  went 
to  the  other  extreme,  and  either  abolished  the  collection 
of  fees  altogether  or  limited  them  to  such  trifling  amounts 
as  to  leave  the  associations  with  practically  no  funds 
from  which  they  could  advertise  their  merits,  or  expend 
any  money  as  compensation  for  soliciting  new  business. 
In  some  States  the  statute  absolutely  forbids  associations 
paying  any  sum  whatever  as  commission  for  soliciting 
new  members. 

Cancellation  Fees. 

In  one  of  the  Western  States,  where  the  law  is  more 
liberal,   a   very   successful  association   has  adopted   the 

[118] 


PLANS  OF  ASSOCIATIONS. 

plan  of  abolishing  all  fees  and  fines,  except  that  of  a  can- 
cellation fee  of  $i.oo  per  share,  which  is  retained  by  the 
association  from  every  member's  stock  when  he  severs 
his  connection  with  the  association,  either  by  withdraw- 
ing or  by  the  maturity  and  payment  of  his  shares.  Under 
this  plan  all  the  money  paid  in  by  the  member  remains 
to  his  credit,  participating  in  regular  dividends,  so  long 
as  he  retains  his  membership.  For  example,  a  member 
subscribes  for  ten  shares  of  the  association's  stock,  pay- 
able in  installments  of  $io  per  month.  When  he  retires 
from  the  association,  $io  of  his  credit  is  retained  by  the 
association  as  a  cancellation  fee.  This,  however,  need  not 
be  a  loss  to  the  member,  since  he  is  given  a  cancellation 
certificate  for  the  amount  thus  retained,  and  if,  at  any 
time  within  a  fixed  period,  usually  one  year,  he  rejoins 
the  association,  and  subscribes  for  another  ten  shares  of 
stock  the  association  will  receive  this  certificate  as  a  cash 
payment  and  again  place  it  to  his  credit,  drawing  interest 
as  before.  These  certificates  are  not  transferable,  and 
can  only  be  used  by  the  individual  to  whom  they  are 
issued.  While  this  deduction  is  called  a  cancellation 
fee,  as  a  matter  of  practice  the  first  $io  which  the 'mem- 
ber pays  in  on  his  stock  is  at  once  credited  this  fee  and 
carried  to  the  profit  and  loss  account  and  is  available  at 
once  for  use  by  the  association  as  an  item  of  profit. 

In  the  association  referred  to,  the  revenue  from  this 
source  has  been  of  such  volume  as  to  pay  practically  all 
the  running  expenses  of  the  association  and  has  enabled 
them  to  employ  one  or  more  solicitors,  devoting  their 
time  to  procuring  new  members  and  subscriptions  to  the 
stock  of  the  association,  for  which  they  receive  a  portion 
of  this  cancellation  fee.  The  success  of  this  association 
has  been  remarkable,  since  it  has  accumulated  almost  five 
million  dollars  of  assets  in  about  six  years'  existence; 
and  seems  to  demonstrate  the  very  high  value  of  personal 

[119] 


CHAPTER  VII. 

solicitation  as  a  means  for  advertising  and  calling  the 
attention  of  the  i)nl)lic  to  the  merits  of  huilding  associa- 
tions. 

All  kinds  of  advertising  is  of  greater  or  less  value, 
but  no  kind  (^f  advertising  is  so  effective  and  produces 
such  immediate  and  satisfactory  results  as  personal  solic- 
itation. The  spoken  word,  man  to  man,  has  greater 
weight  and  is  far  more  convincing  than  any  use  of  the 
printed  page. 

Special  Deposits, 

In  every  community  will  be  found  many  people  who  are 
prejudiced  against  the  idea  of  purchasing  stock  and  as- 
suming a  stockholders  liability.  The  character  of  an 
investment  in  a  building  and  loan  association  is  so  dif- 
ferent in  its  nature  from  that  of  stock  in  an  ordinary 
corporation  that  it  is  unfortunate  that  there  is  not  in  the 
English  language  some  word  other  than  "stock"  which 
might  be  applied  to  a  building  association  investment. 
No  other  name,  however,  has  thus  far  been  suggested,  and 
investments  in  building  associations  are  universally 
termed  "subscriptions  for  stock."  The  prejudice  against 
stock  investments  has  undoubtedly  kept  multitudes  of 
individuals  from  membership  in  a  building  association 
who  would  have  become  members  had  they  thoroughly 
understood  the  real  nature  of  the  rights,  duties  and  obli- 
gations of  building  association  members.  This  condition 
has  been  met  in  some  States  by  a  provision  of  the  law 
which  enables  building  associations  to  receive  "Special 
Deposits."  The  owner  of  a  special  deposit  account  does 
not  become  a  stockholder  in  the  building  association. 
He  assumes  no  stockholder's  liability,  does  not  participate! 
in  the  dividends  declared  by  an  association,  but  receives 
a  specified  rate  of  interest  on  the  money  he  entrusts  to 
its  care. 

[120! 


PLANS  OF  ASSOCIATIONS. 

Special  deposit  accounts  are  a  preferred  claim  against 
all  the  assets  of  the  association  and  in  case  the  associa- 
tion should  become  financially  embarrassed,  these  special 
deposits  must  be  paid  in  full  before  the  stockholders  are 
paid.  The  rate  of  interest  paid  on  special  deposits  is 
usually  less  than  the  rate  of  dividends  paid  on  stock. 
Associations  that  have  large  sums  of  these  special  de- 
posits, sometimes  exceeding  their  stock  deposits,  are  able 
to  pay  larger  stock  dividends,  because  of  the  profit  from 
the  use  of  these  deposits  drawing  a  lower  rate  of  interest, 
and  loaned  out  at  the  usual  rate  on  mortgage  loans. 
There  are  only  a  few  States  which  permit  building  asso- 
ciations to  accept  deposits  of  this  character. 

Permanent  or  Guarantee  Stock. 

In  some  States  building  associations  are  permitted  to 
issue  a  class  of  stock  known  as  "Guarantee"  or  "Perma- 
nent" stock.  This  class  of  stock  is  thus  defined  in  the 
statute  of  California : 

"Guarantee  stock  shall  be  stock  provided  for  in  the  by-laws 
to  be  set  apart  and  sold  as  a  fixed,  permanent  or  guarantee  capital. 
When  any  such  stock  has  been  once  so  set  apart  and  sold  and  issued, 
it  shall  thereafter  remain  as  a  fixed,  permanent  and  guarantee  capital, 
and  shall  be  subject  to  all  the  conditions  and  liabilities  attaching  to 
the  paid-in  capital  stock  of  other  classes  of  corporations.  Such 
guarantee  stock  shall  protect  and  guarantee  all  other  stockholders 
and  creditors  against  any  loss,  and  when  once  paid  it  must  be  kept 
unimpaired." 

The  following  is  the  provision  of  the  Kansas  statute 
on  this  subject : 

"Any  such  corporation  may  issue  permanent  stock  for  which 
full  par  value  shall  be  paid  at  time  of  issue,  or  in  monthly  install- 
ments of  $.').00  per  share,  at  the  option  of  the  purchaser,  and  on 
which  permanent  stock  a  full  dividend  or  a  definite  dividend  may  be 
paid,  which  dividend  shall  in  no  case  exceed  the  per  cent  per 
annum  yielded  by  any  other  class  or  series  of  stock  at  the  time  such 

[1211 


CHAPTER  VII. 

dividend  is  declared.  The  balance  of  profit,  if  any,  and  the  principal 
paid  on  said  stock,  shall  not  be  paid  to  the  holders  of  the  same  until 
all  lawful  claims  of  every  other  class  of  stock  in  its  series,  as  ex- 
pressed in  the  certificates  of  such  other  classes,  and  all  other  liabil- 
ities of  such  corporation  shall  have  been  fully  liquidated  and  paid." 

In  States  which  provide  for  the  issue  of  this  perma- 
nent or  guarantee  stock,  associations  are  usually  per- 
mitted to  specify  at  the  time  of  issuing  the  rate  of  divi- 
dend which  other  stock  shall  receive,  and  after  paying 
this  specified  rate  to  the  other  classes  of  stock,  the  residue 
of  the  profits  may  be  distributed  as  a  dividend  on  this 
guarantee  stock. 

In  the  State  of  Washington  stock  of  this  character  is 
called  Resen'c  Fund  Stock,  and  the  by-laws  of  any  asso- 
ciation may  provide  for  the  issue  of  reserve  fund  stock, 
up  to  5  per  cent  of  its  paid-in  capital,  and  further  pro- 
vided : 

"Such  reserve  fund  stock  may  participate  in  all  earnings  equit- 
ably with  the  general  stock,  and  be  chargeable  with  real  estate  taken 
under  foreclosure  or  otherwise  in  the  adjustment  of  delinquent 
loans,  together  with  all  direct  losses  of  whatever  nature  sustained 
by  the  association  in  the  general  course  of  business,  and  in  considera- 
tion of  such  guarantee  against  loss,  and  when  provided  in  the  by- 
laws such  stock  may  receive  additional  dividends  and  such  stock 
shall  not  be  subject  to  withdrawal  until  all  other  liabilities  and  all 
other  classes  of  stock  of  the  association  shall  have  been  liquidated, 
and  an  association  may  agree  to  mature  its  other  classes  of  stock 
at  a  fixed  time,  provided  any  deficiency  arising  therefrom  shall  be 
chargeable  only  to  such  reserve  fund  stock." 

Farm  Loans  or  Rural  Credit. 

One  of  the  most  significant  developments  of  the  build- 
ing association  movement  in  recent  years  is  its  applica- 
tion to  the  making  of  farm  loans.  For  many  years  these 
institutions  restricted  their  loaning  operations  to  loans 
repayable  by  weekly  or  monthly  payments.  This  practice 
had  become  so  firmly  established  that  the  idea  became 

[122] 


PLANS  OF  ASSOCIATIONS. 

quite  generally  accepted  that  the  weekly  or  monthly  pay- 
ment was  one  of  the  essential  features  of  building  asso- 
ciation business. 

Farming  conditions  in  most  communities  are  such  that 
few  farmers  can  make  weekly  or  monthly  payments. 
Farmers  must  usually  depend  on  their  annual  crops  or 
the  sale  of  live  stock  for  their  income,  and  these  are 
generally  marketed  only  once  or  twice  a  year.  Many 
prosperous,  well-to-do  farmers  find  it  impossible  to  make 
monthly  or  weekly  payments  on  a  loan,  but  could  easily 
pay  the  aggregate  dues  annually  or  semi-annually.  So 
long  as  building  associations  insist  on  weekly  or  monthly 
payments,  from  all  of  their  borrowers,  they  are  practi- 
cally barred  from  making  loans  to  farmers. 

An  amortized  loan  on  the  building  association  plan  is 
one  paid  off  by  periodical  installments,  covering  the  ac- 
crued interest  and  an  additional  sum  for  a  sinking  fund 
with  which  to  meet  the  debt,  or  as  is  sometimes  done,  to 
be  applied  directly  in  reduction  of  the  debt.  It  so  hap- 
pened that  in  the  early  days  of  building  associations  most 
of  their  members  drew  their  wages  monthly  and  to  meet 
the  convenience  of  their  members  the  periodic  payments 
were  adjusted  to  coincide  with  their  monthly  pay  days.  In 
other  communities,  where  wages  were  paid  weekly,  build- 
ing associations  adjusted  their  plan  to  meet  that  condition, 
and  received  their  contributions  from  their  members 
weekly  instead  of  monthly. 

Under  the  elastic  and  flexible  plan  on  which  the  perma- 
nent associations  are  conducted,  the  contracts  with  each 
individual  borrower  can  be  arranged  and  adjusted  to  suit 
his  convenience.  Where  his  income  is  received  weekly, 
his  contributions  to  the  association  may  be  made  weekly. 
Where  he  receives  his  wages  monthly,  his  contract  pro- 
vides for  monthly  payment;  and  a  farmer  who  receives 
his  income  once  or  twice  a  year  can,   under  this  plan, 

1123] 


CHAPTER  VII. 

make  a  loan  payable  semi-annually  or  annually,  as  may 
best  suit  his  convenience.  All  these  varying  contracts 
are  the  same  in  principle;  namely,  paying  off  the  loan  in 
periodic  payments  to  suit  the  convenience  of  the  borrower. 

The  extension  of  the  building  and  loan  system  to  the 
making  of  farm  loans  payable  in  semi-annual  or  annual 
payments  has  opened  to  the  building  association  move- 
ment a  field  of  tremendous  magnitude. 

While  the  extension  of  building  and  loan  associations 
in  reference  to  the  field  of  farm  loans  is  comparatively 
recent,  it  has  already  assumed  quite  large  proportions, 
and  is  growing  at  a  very  rapid  rate.  The  Ohio  building 
associations  are  now  carrying  about  thirty  million  dollars 
of  farm  loans  on  the  building  association  plan,  and  in 
the  States  of  Indiana,  Kansas,  Nebraska,  and  others,  this 
line  of  business  is  being  rapidly  extended. 


[1241 


CHAPTER  VIII. 

How  to  Organize. 

Necessary  Conditions. 

The  plans  and  methods  of  organizing  a  building  asso- 
ciation have  undergone  great  changes  in  the  last  few 
decades.  In  the  early  days  of  building  association  de- 
velopment they  were  confined  to  thickly  settled  communi- 
ties, and  their  membership  was  exclusively  made  up  of 
wage-earners,  receiving  their  pay  monthly.  Industrial 
conditions  have  greatly  changed  since  that  time.  The 
payment  of  wages,  semi-monthly  or  weekly,  has  become 
almost  universal  in  American  industry.  Keeping  step 
with  this  change,  building  associations  very  quickly  ad- 
justed their  plan,  and  instead  of  requiring  payments  on 
association  stock  and  loans  to  be  made  monthly,  as  origin- 
ally provided,  semi-monthly  or  weekly  payments  were 
soon  provided  by  building  associations,  to  correspond 
with  their  members'  ])ay-days.  It  was  also  found  that 
in  every  community  there  were  individuals  whose  income 
was  irregular  in  amount  and  uncertain  as  to  the  time  to 
which  it  was  received;  that  these  individuals  would  be 
glad  to  avail  themselves  of  the  benefits  and  advantages 
that  a  building  association  offered,  but  could  not  comply 
with  the  rigid  rules  requiring  regular  payments  of  speci- 
fied amounts.  This  was  csi)ecial]y  true  in  small  towns 
in  agricultural  Cf)mmunities,  where  the  regular  wage- 
earners  were  not  sufficietil  in  miniber  to  justify  the  organ- 
ization of  a  building  association  for  their  cxchisivc  use; 
where   farmers   in    the   surrounding   country    would   not 

1126] 


CHAPTER  VIII. 

avail  themselves  of  the  advantaj^es  of  building  associa- 
tion menibership  if  regular,  periodic  payments  were  in- 
sisted on. 

The  elastic,  flexible  plan  offered  by  the  permanent  type 
of  building  and  loan  association  has  been  found  admir- 
ably adapted  to  communities  of  this  character,  and  has 
opened  up  a  wide  and  fruitful  fi^ld  in  which  to  plant  and 
cultivate  the  building  association  movement. 

While  it  is  no  longer  necessary  that  the  membership 
in  building  associations  should  be  restricted  to  individuals 
drawing  regular  wages  at  regular  intervals,  it  is  highly 
desirable  that  the  community  in  which  a  building  associa- 
tion is  organized  should  have  a  considerable  portion  of 
its  citizens  thus  engaged.  There  should  be  a  community 
of  wage-earners,  containing  a  considerable  number  of 
persons  with  small  incomes,  and  the  local  industries  from 
which  the  incomes  of  these  members  of  the  community 
are  derived  should  have  the  element  of  permanency ;  that 
is,  the  products  of  the  local  industry  should  be  of  staple 
articles  which  would  probably  always  find  a  ready  market. 
Or  it  should  be  a  community  interested  in  market-garden- 
ing, or  other  line  of  agriculture,  or  engaged  in  numerous 
industrial  enterprises.  It  should  be  constantly  borne  in 
mind  that  the  funds  of  the  association  are  to  be  chiefly 
invested  in  the  building  of  homes  by  the  members  of  the 
association ;  hence  the  community  in  which  a  building  as- 
sociation is  established  should  have  a  variety  of  industries 
and  numerous  concerns  in  which  wage-earners  could  find 
employment. 

In  a  community  containing  but  a  single  industry,  pro- 
viding but  a  single  opportunity  for  obtaining  employ- 
ment, it  might  not  be  advisable  for  a  wage-earner  to  in- 
vest in  a  home,  since  the  destruction  or  removal  of  that 
single  industry  or  the  change  in  commercial  and  financial 
conditions  which  might  compel  it  to  suspend  operations, 

1126] 


HOW  TO  ORGANIZE. 

might  find  the  member  with  all  his  available  funds  in- 
vested in  his  home,  and  absolutely  no  opportunity  within 
his  reach  where  he  could  find  employment  or  by  which 
he  could  earn  a  livelihood. 

Building  associations  have  so  increased  in  number  in 
some  cities  that  there  is  serious  competition  among  them. 
Where  numerous  associations  already  exist,  the  question 
should  be  carefully  considered  as  to  whether  there  is  a 
real  need  or  demand  for  another.  It  sometimes  occurs 
that  associations  are  organized  not  so  much  to  supply 
the  actual  needs  of  the  people  who  are  induced  to  become 
members  as  in  response  to  the  efforts  of  some  individual 
or  individuals  who  have  their  own  private  ends  in  view. 
Sometimes  persons  engaged  in  trade  may  desire  to  or- 
ganize an  association  and  have  it  meet  at  their  place  of 
business  or  in  their  vicinity,  for  the  purpose  of  drawing 
custom  for  them.  Some  attorney  may  take  an  active  part 
in  the  organization  of  an  association  in  order  to  increase 
his  clientage,  h  ([uite  frequently  occurs  that  someone 
interested  in  a  real  estate  subdivision  may  organize  an 
assfjciation  in  order  to  find  a  market  for  his  lots.  These 
motives  are  not  objectionable  in  themselves,  provided 
there  is  back  of  them  a  real  need  for  an  association  on  the 
part  of  the  members  themselves,  who  are  to  compose  it. 
In  many  communities  where  building  associations  are 
very  numerous  it  would  .seem  more  proper  to  consider 
the  question  of  combining  and  consolidating  some  of  the 
smaller  associations,  reducing  the  overhead  expenses  ofi 
management,  rather  than  to  increase  the  number  of  them 
by  organizing  new  associations. 

Preliminary  Ste{>s. 

Very  great  care  should  be  given  to  the  first  steps 
taken  toward  the  organization  of  an  association.  Unless 
a  good  foundation   is  laid  in  the  beginning,  the  enter- 

(127J 


CHAPTER  ViU. 

prise  cannot  he  assured  of  success.  Take,  for  example, 
the  orgfanization  of  an  associaticm  in  a  town  which  has 
none.  If  it  is  a  hve.  prosperous  community  with  a  fair 
prop(.)rtion  oi  working-  men  earning'  regular  wages  in 
firmly  established  and  i)ernianent  industrial  concerns,  of 
which  there  should  be  several ;  a  community  furthermore, 
surrounded  by  a  prosperous  agricultural  community, 
commanding  a  mercantile  trade  of  reasonable  volume, 
this  would  be  a  very  proper  one  in  which  to  organize 
and  operate  a  building  association. 

Great  care  must  be  taken  to  have  only  trustworthy  men 
connected  with  the  organization  of  such  an  association, 
as  well  as  conducting  it  through  all  its  progress. 

When  the  proper  persons  have  been  interested  in  the 
movement,  it  is  usual  for  them  to  attach  their  names  to 
an  agreement  to  share  equally  in  the  liabilities  for  the 
preliminary  expenses,  such  as  advertising,  rent  for  place 
of  meeting,  blank  books,  forms  and  supplies.  A  public 
meeting  should  then  be  called  for  in  some  convenient  and 
respectable  place.  At  this  meeting  temporary  of^cers 
should  be  chosen.  These  consist  usually  of  a  chairman, 
a  treasurer,  a  secretary,  and  an  attorney.  These  should 
be  persons  of  position  and  influence  in  the  community, 
who  have  had  some  experience  conducting  public  meet- 
ings. Someone  should  be  present  at  such  a  meeting  who 
is  able  and  prepared  to  make  a  clear  explanation  of  the 
plans,  purposes,  and  workings  of  a  building  association. 
In  case  no  one  in  the  community  is  available  who  has 
had  sufficient  experience  to  properly  present  the  subject, 
it  would  be  highly  desirable  to  secure  the  services  of  an 
expert  from  some  other  community  who  could  properly 
present  this  subject. 

It  should  be  made  plain  that  such  an  association  is  not 
an  individual  enterprise,  but  is  a  community  proposition, 
in  which  every  member  of  the  community  has  a  vital  in- 

[1281 


HOW  TO  ORGANIZE. 

terest.  It  is  not  organized  to  advance  the  personal  inter- 
ests of  any  individual  or  group  of  individuals  or  of  any 
special  line  of  business  in  the  city,  but  is  to  be  an  insti- 
tution for  aiding  every  individual  who  cares  to  become 
a  member  in  forming  and  practicing  habits  of  thrift  and 
saving,  and  increasing  his  personal  prosperity;  and  for 
the  further  purpose  of  improving  and  upbuilding  the 
community  and  adding  to  the  community  wealth  by  the 
building  of  homes  for  those  who  need  them.  Even  be- 
fore such  a  meeting  is  held,  it  would  be  advisable  for  the 
promoters  to  have  personal  interviews  with  the  managers 
of  the  leading  industries  and  business  concerns  of  the 
community,  and  their  attention  clearly  called  to  the  ad- 
vantages and  benefits  which  such  an  institution  would 
supply  to  the  community,  and  indirectly,  to  every  line  of 
business  in  the  community. 

Dealers  in  lumber  and  other  building  materials  are 
especially  interested  in  such  an  institution.  Each  new 
house  which  a  building  association  makes  possible,  means 
more  business  for  the  dealer  in  this  class  of  material. 
The  hardware  dealer  can  readily  be  shown  how  he  is  in- 
terested in  the  success  of  such  an  enterprise.  Every  new 
house  must  be  furnished,  and  this  is  an  interesting  sub- 
ject to  every  dealer  in  furniture,  carpets  and  curtains, 
and  all  the  other  items  that  go  to  furnishing  a  home. 
Every  new  home  that  is  built  supplies  work  for  all  the 
various  building  trades,  the  carpenters,  the  bricklayers, 
the  plasterers,  the  painter,  the  decorator.  So  all  the 
labor  unions  engaged  in  this  line  have  a  vital  interest  in 
the  success  of  the  building  association.  Every  new  home 
must  be  heated,  so  that  the  activities  of  an  enterprise, 
which  devotes  its  energies  to  the  building  of  new  homes, 
becomes  at  once  of  deepest  interest  to  the  dealer  in  coal 
or  other  fuel.  This  list  might  be  indefinitely  extended  to 
show  that  every  business  man  engaged  in  every  line  of 

1129] 


CHAPTER  VIII. 

business  has  a  vital,  personal  business  interest  in  the  or- 
ganization and  successful  operation  of  a  building  associa- 
tion in  his  community,  and  when  these  facts  are  properly 
presented  it  should  be  an  easy  matter  to  secure  the  helpful 
co-operation  of  every  far-seeing  business  man  in  the  com- 
munity, and  to  secure  their  aid  in  making  the  organiza- 
tion and  management  of  such  an  association  a  success. 
It  may  not  be  possible  at  the  first  meeting  to  determine 
finally  as  to  the  advisability  of  attempting  to  organize 
an  association.  The  meeting  may  decide  to  appoint  solic- 
itors to  make  a  preliminary  canvass  so  as  to  discover 
the  possibility  of  securing  a  sufficient  number  of  members 
to  justify  the  attempt.  For  this  or  other  satisfactory  rea- 
sons it  may  be  necessary  to  hold  several  preliminary  meet- 
ings before  attempting  a  permanent  organization.  Care 
should  be  exerted  in  keeping  the  preliminary  expenses  as 
low  as  possible.  In  many  communities  the  Board  of 
Trade,  Chamber  of  Commerce,  Rotary  Club,  or  other 
similar  organization  of  business  men,  and  sometimes  a 
combination  of  these,  interest  themselves  in  the  organi- 
zation of  such  an  association  and  supply  the  funds  to  pay 
the  expenses  of  the  preliminary  organization,  and  the 
procurement  of  the  books  and  supplies  for  the  associa- 
tion, so  that  it  may  begin  business  without  requiring 
expenses  of  this  character  to  be  paid  for  from  associa- 
tion funds. 

Choice  of  Name. 

When  the  organization  of  a  building  association  has 
been  finally  decided,  one  of  the  first  things  to  be  done  is 
to  choose  a  name  for  the  institution.  In  making  this 
choice  the  following  matters  must  be  borne  in  mind: 

First :  The  name  must,  in  its  form,  correspond  to  the 
requirements  of  the  statute  under  which  the  association 
is  organized. 

[130] 


HOW  TO  ORGANIZE. 

Second :  It  must  not  be  connected  with  or  bear  a  close 
and  misleading  resemblance  to  the  name  of  any  other 
similar  organization  in  the  place  where  organized. 

Third:  It  must  not  be  of  such  general  descriptive 
character  that  the  association  can  not,  by  using  it,  acquire 
exclusive  rights  in  it. 

Fourth :  The  name  must  not  be  improperly  or 
prejudicially  assumed,  and  must  not  be  misleading  in  its 
form  or  character. 

Ca{ntal  Stock. 

^t  an  early  stage  of  the  proceedings  it  will  be  neces- 
sary to  determine  upon  the  amount  of  authorized  capital 
stock  of  the  proposed  association  and  the  number  and  par 
value  of  the  shares.  The  authorized  capital  and  the  num- 
ber and  par  value  of  the  shares  should  be  determined 
largely  by  local  conditions.  In  some  States  the  fee  for 
obtaining  a  charter  or  articles  of  incorporation  is  based 
upon  the  amount  of  authorized  capital.  In  some  States 
this  charter  fee  is  so  large  and  excessive  as  to  be  quite 
burdensome.  In  other  States  the  statute  provisions  recog- 
nize the  practical  character  of  a  building  association  and 
make  the  charter  fee  merely  a  nominal  one.  In  Ohio  a 
building  association  charter  fee  is  $io,  regardless  of  the 
amount  of  authorized  capital,  while  in  other  States  the 
charter  fee,  which  must  be  paid  is  as  high  as  fifty  cents  on 
each  thousand  dollars  of  authorized  capital. 

This  charter  fee  is,  perhaps  not  excessive  for  ordinary 
corporations  where  the  subscribed  capital  must  be  paid 
in  cash  at  the  time  of  organization ;  but  for  a  building 
association  in  which  a  subscription  to  $i,ooo  of  the  cap- 
ital stock  is  paid  by  the  subscriber  in  installments  of, 
say  $io  per  month,  a  charter  fee  of  that  size  is  exorb- 
itant and  excessive.  In  ordinary  corporations  the  amount 
of  capital  stock  usually  forms  but  a  small  fraction  of  its 

ll.-ni 


CHAPTER  VIII. 

assets,  while  in  a  Iniilding  association  the  authorized 
capital  is  always  largely  in  excess  of  its  assets.  Ordinary 
corporations  are  usually  operated  with  the  aim  of  securing 
large  pn^fits  for  a  small  group  of  stockholders,  in  some 
line  of  business  dealing  with  the  general  public.  It  might 
be  operated  successfully  and  profitably  for  the  stock- 
holders without  creating  a  single  dollar's  worth  of  taxable 
community  wealth.  A  building  association,  however,  is  a 
quasi-public  institution,  in  which  every  citizen  has  the 
opportunity  of  acquiring  membership  and  sharing  in  its 
benefits  and  at  the  same  time  is  constantly  creating  per- 
manent additions  to  the  tax-paying  wealth  of  the  com- 
munity. These  considerations  should  be  adequate  reason 
why  the  organization  of  building  associations  should  be 
encouraged  and  stimulated  by  permitting  them  to  be  or- 
ganized at  the  least  possible  cost  and  expense. 

In  communities  where  conditions  indicate  that  an  asso- 
ciation would  quickly  and  rapidly  grow  to  a  large  size, 
the  initial  authorized  capital  is  usually  placed  at  from 
five  hundred  thousand  to  five  million  dollars,  the  par 
value  of  the  shares  ranging  from  one  hundred  to  five 
hundred  dollars  each.  In  small  towns,  where  building 
associations  development  would  be  naturally  more  limited 
and  restricted,  the  initial  authorized  capital  varies  from 
fifty  thousand  to  one  million  dollars.  The  regular  dues 
or  periodic  payments  on  installment  stock  are  usually 
fixed  at  twenty  cents  to  fifty  cents  per  week,  or  one  dollar 
to  two  dollars  per  month. 

This  charter  fee  is,  perhaps,  not  excessive  for  ordinary 
is  sometimes  limited,  so  that  the  association  cannot  be 
controlled  by  a  few  large  shareholders.  The  same  re- 
sults are  frequently  attained  in  other  ways.  For  example, 
in  some  States  the  statute  provides  that  each  shareholder 
shall  be  entitled  to  cast  one  vote  only,  regardless  of  the 
number  of  shares  he  may  own.     In  other  States,  the  law 

L1321 


HOW  TO  ORGANIZE. 

provides  that  a  shareholder  may  cast  one  vote  for  each 
share  of  stock  which  he  owns,  provided  that  the  total 
number  of  votes  which  he  may  cast  in  his  own  right  shall 
not  exceed  twenty.  Another  plan  for  preventing-  the  con- 
trol of  the  association  falling  into  a  few  hands  is  adopted 
by  some  associations  providing  in  their  by-laws  that  each 
member  shall  be  entitled  to  cast  one  vote  for  each  $ioo 
paid  in  on  his  stock,  and  a  proportionate  fraction  of  a 
vote  for  all  sums  so  credited  thereon  less  than  $ioo,  and 
at  the  same  time  limiting  the  total  number  of  votes 
which  any  shareholder  may  cast. 

The  name  of  the  association  and  the  amount  of  the 
authorized  capital  and  par  value  of  the  stock  are,  of 
course,  essential  features  in  the  articles  of  incorporation, 
and  in  the  constitution  which  is  adopted.  The  whole 
subject  of  capital  stock,  which  is  of  great  importance, 
is  fully  discussed  in  its  appropriate  place  in  another  part 
of  this  book. 

The  Constitution. 

One  of  the  most  important  matters  connected  with  the 
organization  of  an  association  is  the  framing  of  the  rules 
or  articles  under  which  it  is  to  be  operated.  This  task 
should  be  placed  in  the  most  competent  and  experienced 
hands,  and  their  work  should  be  carefully  revised  and 
scrutinized  before  adoption.  In  some  States  the  essential 
fundamental  plan  of  the  association,  that  is  to  say,  its 
constitution,  is  a  part  of  the  articles  of  incorporation  to 
be  approved  by  the  State  authorities,  and  forms  the  char- 
ter under  which  it  is  authorized  to  operate.  In  other 
States  the  charter  or  articles  of  incorporation  is  merely  an 
authority  issued  by  the  State,  permitting  the  association 
to  organize  and  conduct  its  business.  But  in  nearly  every 
State  the  charter  or  articles  of  incorporation,  the  consti- 

\m] 

10 


CHAPTER  VIII. 

tut  ion  and  the  by-laws,  are  subject  to  inspection,  revision 
and  approval  of  some  State  authority.  As  this  constitu- 
tion, or  articles  of  incorporation,  where  the  law  so  re- 
quires, becomes  the  fundamental  law,  it  should  be  framed 
and  drafted  with  a  view  to  permanency,  and  changes 
therein  should  only  be  permitted  through  imperative 
necessity  and  requiring  a  large  majority  approaching 
unanimity  of  the  shareholders  to  change  it.  For  this 
reason  it  should  be  drafted  on  broad  lines,  including 
only  the  fundamental  plan,  principles  and  regulations  upon 
which  the  association  is  to  be  operated.  It  should  be  ex- 
pressed in  plain  language,  avoiding  all  clouded  and  doubt- 
ful phrasing.  All  minor  regulations  covering  the  de- 
tailed operation  of  the  association  should  be  omitted  from 
the  constitution  or  articles  of  incorporation  and  reserved 
for  the  by-laws  and  rules  of  business. 

The  constitution  should  not  only  have  the  greatest  care 
and  forethought  on  the  part  of  those  drafting  and  adopt- 
ing it,  but  it  should,  if  possible,  be  based  and  formulated 
upon  some  model  which  has  stood  the  test  of  experience. 
Much  the  largest  part  of  the  litigation  that  has  arisen 
in  the  different  States  in  connection  with  building  asso- 
ciation afifairs  grows  out  of  the  crude,  careless  and  infor- 
mal manner  in  which  constitutions  and  by-laws  have 
been  framed.  Courts  have  made  much  complaint  about 
the  negligence  and  carelessness  displayed  in  the  wording 
of  these  important  documents.  It  is  not  uncommon,  in- 
deed, to  find  contradictory  provisions  in  the  same  consti- 
tution, relating  to  important  matters.  The  constitution 
being  the  fundamental  organic  law  under  which  the  as- 
sociation operates,  should  be  adopted  by  and  subject  to 
change  only  by  the  membership,  and  as  stated  before,  it 
should  require  a  large  majority  of  the  membership  to 
adopt  or  change  this  organic  instrument, 

[134] 


HOW  TO  ORGANIZE. 

By-Laws. 

After  the  constitution  has  been  adopted,  a  set  of  by- 
laws should  be  prepared,  governing  the  minute  details 
of  the  operation  of  the  association,  and  these  also,  should 
be  in  accordance  with  the  State  laws  and  with  the  con- 
stitution adopted,  and  should  follow  generally  accepted 
parliamentary  usage.  Some  associations  make  the  mis- 
take of  including  alf  these  detailed  rules  covering  the 
minute  operation  and  procedure  of  their  associations, 
in  the  constitution.  The  by-laws  are  not  of  an  organic 
character,  but  are  simply  an  expressed  agreement  among 
the  members  as  to  how  the  different  details  of  the  asso- 
ciation work  should  be  carried  on.  These  should,  there- 
fore, be  kept  separate  from  the  constitution,  so  that  they 
may  be  changed  and  modified  from  time  to  time,  as  experi- 
ence may  show  would  make  the  operation  of  the  institu- 
tion more  simple,  convenient  and  efficient.  Many  asso- 
ciations provide  that  the  board  of  directors  of  the  asso- 
ciation shall  have  authority  to  amend,  repeal  or  modify 
the  by-laws,  or  enact  additional  by-laws,  because  when 
such  changes  become  necessary  the  board  of  directors  can 
act  more  quickly  and  promptly  than  the  entire  member- 
ship. In  some  States,  however,  the  statute  provides  that 
by-laws  can  be  adopted  or  changed  only  by  the  member- 
ship and,  of  course,  where  such  statute  exists,  that  plan 
must  be  followed. 

The  by-laws  must  conform  to  the  constitution  of  the 
association,  to  its  articles  of  incorporation,  and  the 
statutes  of  the  State,  and  to  the  general  principle  of  com- 
mon justice  and  equity,  and  must  be  reasonable  in  their 
requirements.  No  by-laws  can  be  enforced  that  infringe 
on  the  common  rights  or  the  rights  established  by  con- 
tract with  any  member.  In  like  manner,  if  a  by-law  is  re- 
pealed and  thereby  injustice  is  done  to  any  member 
whose  rights  were  protected  by  the  by-law,  such  action  is 

[135J 


CHAPTER  VIII. 

void.  The  adoption  of  new  by-laws  cannot  add  additional 
burdens  or  requirements  to  contracts  in  existence  before 
their  adoption.  By-laws  must  not  be  adopted,  which  from 
their  nature,  can  not  be  enforced  or  which  are  evidently 
of  a  "nugatory  and  oppressive"  character,  nor  can  any 
by-laws  be  enforced  which  have  the  effect  of  depriving 
or  restricting  any  member  from  his  legal  rights  and 
remedies.* 

Incorporation. 

The  procedure  by  which  corporations  are  created  varies 
in  the  different  States.  In  some  States  they  are  created 
by  a  special  act  of  the  Legislature.  In  others  they  are 
created  in  accordance  with  the  general  corporation  law, 
which  applies  to  all  forms  of  corporations  alike.  In  some 
States  they  may  become  incorporated  by  voluntary  asso- 
ciation ;  in  others  by  an  order  or  decree  of  court,  and  in 
some  by  letters  patent  from  the  executive  or  some  other 
designated  State  officer.  In  a  number  of  States,  special 
provision  is  made  for  the  incorporation  of  building  asso- 
ciations, treating  them  as  a  special  class,  with  special 
powers.  The  steps  by  which  a  building  association  is 
incorporated  should  follow  strictly  the  statute  provisions 
of  the  State  under  which  it  is  organized.  After  the  con- 
stitution has  been  adopted,  or  sometimes  even  before  this 
has  been  done,  articles  of  incorporation  should  be  pre- 
pared and  forwarded  to  the  proper  authority  for  accept- 
ance and  record.  In  many  of  the  States  the  incorporating 
authorities  furnish  blank  forms  and  detailed  instructions 
as  to  the  proper  steps  to  pursue  in  securing  a  charter  or 
articles  of  incorporation.  The  statutes  of  most  of  the 
States  require  that  a  certain  amount  of  stock  must  be  sub- 
scribed before  the  association  can  be  incorporated.  The 
drafting  and  securing  of  articles  of  incorporation  should 

*  In  tiie  appendix  will  be  found  a  specimen  for  constitution  and  by-laws. 

[136] 


HOW  TO  ORGANIZE. 

be  placed  in  the  hands  of  competent  attorneys.  Forms  of 
incorporation  papers  in  common  use  in  Ohio  are  gfiven  in 
another  place.* 

Officers. 

The  constitution  generally  designates  the  titles  of  the 
officers  of  the  association  and  the  time  and  method  of 
their  election.  As  soon  as  articles  of  incorporation  have 
been  received  and  the  constitution  and  by-laws  have  been 
adopted,  it  will  be  necessary,  to  complete  the  permanent 
organization  of  the  association,  by  the  election  of  pre- 
scribed officers,  according  to  the  methods  laid  down  in 
the  constitution.  The  same  care  must  be  exercised  here 
as  in  all  other  steps  incident  to  the  formation  of  the 
association.  The  officers  are  to  occupy  very  responsible 
positions,  and  should  be  men  possessing  integrity  and 
popularity.  Practically  they  will  have  full  control  of  the 
affairs  of  the  association.  Its  success  depends  very  largely 
upon  the  attention  which  they  give  to  its  business.  The 
success  of  the  institution  and  the  interests  of  the  share- 
holders will  be  promoted  or  injured,  according  to  the 
degree  of  faithfulness  and  ability  with  which  the  officers 
of  the  association  discharge  their  duties. 

In  selecting  members  to  serve  on  the  board  of  direc- 
tors, care  should  be  taken  that  these  members  should  be 
representative  of  as  many  different  interests  of  the  com- 
munity as  possible.  In  some  places  there  are  groups  of 
foreigners  of  different  nationalities.  Special  effort  should 
be  made  to  have  a  representative  leader  of  each  of  these 
nationalities  on  the  board  of  directors,  and  effort  should 
be  made  to  induce  as  many  as  possible  of  these  foreign  res- 
idents to  become  members  of  the  building  association. 
If  this  is  done,  the  association  may  become  a  potent  factor 
in  Americanizing  these  foreign  groups,  in  making  them 

•  See  Chapter  on  "Forms." 

[137] 


CHAPTER  VIII. 

familiar  with  American  ideals  and  customs,  and  inducing 
them  to  become  home-owners  and  permanent  citizens,  and 
teaching  them  a  higher  appreciation  of  the  advantages 
of  American  citizenship.  In  this  way  the  building  asso- 
ciation becomes  a  practical  "melting  pot"  in  which  all 
the  different  nationalities  of  the  community  may  be  fused 
and  amalgamated  into  real  Americans,  eliminating  the 
dross  of  foreign  ideals,  hatreds  and  antipathies,  and  sub- 
stituting therefor,  the  mutual  friendship  and  helpfulness 
of  a  united  American  citizenship. 

Headquarters. 

Before  beginning  the  practical  operation,  an  associa- 
tion should  establish  a  permanent  office  or  headquarters. 
Great  care  should  be  exercised  in  selecting  the  location 
for  conducting  the  business  of  an  association.  It  should 
be  centrally  located,  easy  and  convenient  of  access,  clean 
and  respectable.  While  care  should  be  taken  not  to  locate 
in  an  office  that  will  be  too  expensive,  on  the  other  hand, 
the  mistake  should  not  be  made  of  selecting  a  location  that 
is  inconvenient  and  not  readily  accessible.  Many  an  as- 
sociation has  failed  to  reach  the  degree  of  usefulness  to 
which  it  might  attain,  because  of  making  a  mistake  in 
locating  its  office.  The  headquarters  should  be  fitted  up 
with  furniture  suitable  for  the  business,  but  this  need  not 
be  very  costly.  There  should  be  a  high  desk,  such  as 
book-keepers  commonly  use,  with  a  wire  or  metal  grille 
across  the  top,  containing  wickets  through  which  business 
is  to  be  transacted.  There  should  be  desks,  tables  and 
seats  sufficient  for  the  transaction  of  the  business  of 
the  association.  Each  association  should  have  a  safe  for 
the  proper  protection  of  its  books,  papers  and  such  sums 
of  money  as  may  be  temporarily  in  the  hands  if  its  offi- 
cers. The  officers  being  responsible  for  the  safety  of 
the  property  of  the  association,  are  compelled  to  give 

[138] 


HOW  TO  ORGANIZE. 

bond  for  its  security.  They  should  be  provided  with  a 
safe  place  of  deposit  for  everything  for  which  they  are 
held  responsible. 

After  the  headquarters  have  once  been  established,  it 
should  be  understood  that  this  is  the  regular  business 
oflfice  of  the  association,  and  all  communications,  notices, 
etc.,  intended  for  the  association  should  be  addressed  to 
this  office,  where  they  will  receive  prompt  attention. 

It  is  quite  a  common  practice  to  locate  the  headquarters 
of  a  new  association  in  a  portion  of  an  office  occupied 
by  some  other  line  of  business,  often  in  the  office  occupied 
by  the  party  elected  as  secretary,  who,  at  the  outset,  looks 
after  the  business  of  the  building  association  as  a  side 
line  to  his  regular  business.  By  this  plan  the  initial  ex- 
penses of  the  association  in  the  early  days  of  its  develop- 
ment can  be  materially  lessened. 

It  is  highly  desirable,  however,  that  every  reasonable 
eflfort  should  be  made  by  build  up  the  membership  of  the 
association  as  rapidly  as  possible,  and  to  have  it  attain  a 
volume  which  will  justify  the  sole  attention  of  a  secre- 
tary devoting  himself  exclusively  to  the  business  of  the 
association.  In  most  communities  where  the  organization 
of  an  association  is  justifiable,  this  can  be  done  with 
proper  effort  more  quickly  than  might  be  thought  possible. 

Recruiting  T^embers. 

After  the  organization  of  the  association  is  completed, 
its  books,  blanks  and  supplies  have  been  procured,  and 
an  office  established,  the  next  step,  and  the  one  vital  above 
all  others,  is  the  building  up  of  its  membership.  This 
should  be  made,  so  far  as  possible,  a  community  task, 
not  confined  wholly  to  the  efforts  of  the  secretary  and 
officers  and  board  of  directors,  but  every  business  inter- 
est in  the  community  should  be  enlisted  at  the  outset  in 
popularizing  the  association  and  securing  for  it  the  larg- 


CHAPTER  VIII. 

est  possible  membership.  In  this  work  no  plan  is  so 
effective  as  personal  solicitation.  The  association  should 
have  prepared  a  neat,  attractive  leaflet,  briefly  setting 
forth  the  plan  on  which  it  is  org^anized,  and  the  advan- 
tages to  be  derived  from  membership.  Applications  for 
membership  should  be  printed  on  cards,  to  be  signed  by 
the  applicant.  If  proper  steps  have  been  taken  to  enlist  the 
interest  of  business  organizations  and  business  men  in 
the  enterprise,  and  if  the  plan  and  purposes  of  the  asso- 
ciation have  been  so  generally  explained  as  to  be  thor- 
oughly understood,  it  is  not  usually  a  difficult  matter  to 
induce  a  large  number  of  the  business  men  and  members 
of  business  organizations  of  the  community,  such  as 
Chambers  of  Commerce,  Board  of  Trade,  Rotary  Clubs, 
Trade  Unions,  Young  Men's  Christian  Associations,  and 
other  similar  social  and  business  organizations,  to  take  a 
personal  interest  and  make  a  personal  effort  to  secure 
members  for  the  building  association. 

Another  powerful  assistant,  whose  aid  should  be 
secured  in  promoting  the  organization,  is  the  local  news- 
papers. These  will  be  found  almost  without  exception, 
to  be  interested  in  any  movement  of  this  kind  for  the 
general  good  of  the  community.  See  that  the  reporters 
and  editorial  writers  of  the  local  papers  get  a  clear  con- 
ception of  the  benefits  building  associations  confer  upon 
the  community.  Their  comment  on  the  subject  and  the 
reports  of  the  progress  of  the  work  from  day  to  day  will 
be  found  extremely  helpful. 

Co-o^eratton  with  Banks  Desired. 

Another  powerful  interest,  which  should  be  enlisted  in 
this  work,  is  that  of  the  local  banks.  Some  men  entertain 
the  idea  that  building  associations  and  commercial  banks 
are  rivals  in  business  and  competitors  in  trade;  that  the 
success  of  a  building  association  curtails  the  growth  and 

[140] 


HOW  TO  ORGANIZE. 

restricts  the  business  of  the  commercial  bank  in  that 
community.  Experience  shows  that  this  is  not  the  case. 
Commercial  banks  are  most  prosperous  when  business 
in  the  community  is  brisk  and  lively;  when  money  is 
flowing  rapidly  and  freely  through  the  channels  of  trade. 
A  building  association  has  no  treasure  vault  of  its  own 
where  it  locks  up  funds,  leaving  them  idle  and  out  of  the 
reach  of  the  business  interests  of  the  community ;  but  all 
the  funds  which  a  building  association  receives  is  at  once 
deposited  in  some  bank  and  goes  to  swell  the  resources 
of  the  bank  in  which  it  is  deposited.  Much  the  larger 
part  of  the  money  deposited  in  building  associations 
is  received  from  members  who  never  had  a  bank  account, 
and  which  would  never  reach  the  bank's  vaults,  except 
from  the  hands  of  the  building  association.  When  such 
an  association  pays  out  money,  it  is  not  taken  out  of 
the  community,  and  shipped  to  some  distant  point,  but 
is  loaned  out  to  build  homes  and  create  additional  wealth 
in  the  local  community.  It  is  at  once  paid  out  to  lumber- 
men, the  painter,  the  hardware  man,  the  plasterer,  the 
plumber,  the  brick-mason,  and  in  all  the  various  lines  of 
labor  and  merchandising  which  are  numbered  among  the 
most  highly  prized  customers  of  the  commercial  bank,  to 
whose  vaults  this  money  t|uickly  finds  its  way  again. 
There  is  no  more  ()otent,  effective  factor  for  stimulating 
business  activity.  The  work  of  such  an  institution 
creates  a  business  condition  in  which  commercial  banks 
are  most  thriving  and  prosperous. 

It  is  easily  understood  that  a  commercial  bank 
might  not  favor  the  organization  and  operation 
of  an  institution  in  its  community  if  the  funds  col- 
lected are  sent  out  of  the  community  and  invested 
in  s<jme  distant  place,  thus  reducing  the  volume  of  money 
circulating  in  tiie  neighborhood;  but  a  building  associa- 
tion does  none  of  these  things.     It  mobilizes  the  idle  funds 

1141] 


CHAPTER  VIII. 

of  a  community,  deposits  them  in  bulk  in  the  local  bank, 
and  disburses  them  through  tiie  channels  of  local  trade, 
stimulating  local  business  and  enhancing  local  prosperity. 

These  facts  are  well  understood  by  the  big  men  in  the 
banking  business,  and  the  banker  of  broad  views  is  almost 
invariably  found  promoting  and  encouraging  building 
associations.  In  the  larger  cities,  where  the  employes 
in  the  large  banks  are  numbered  by  the  hundreds,  an  in- 
creasing number  of  them  are  urging  and  encouraging 
their  employes  to  organize  a  building  association  among 
themselves,  and  associations  of  this  kind  are  found  in 
great  numbers. 

Another  very  common  practice  is  to  suggest  to  each 
new  member  who  joins  the  association  that  he  take  a 
supply  of  these  leaflets  and  membership  cards  to  dis- 
tribute among  his  friends,  urging  them  also  to  join  the 
association.  An  attractive  sign  should  be  displayed  at 
the  office,  advertising  the  association.  A  neatly-lettered 
sign  upon  the  window  of  the  association  office  should 
not  be  overlooked.  Many  an  association  has  received  new 
members  through  the  display  of  such  an  attractive  sign. 
Newspaper  advertising,  to  a  reasonable  extent,  is  valuable. 
Directors  should  not  be  over-economical  in  this  connec- 
tion. Money  judiciously  expended  in  advertising  an  asso- 
ciation will  bring  desirable  returns,  but  it  should  always 
be  remembered  that  no  form  of  publicity  or  advertising 
is  so  forcible  and  effective  as  personal  solicitation. 

Whenever  it  can  possibly  be  done,  arrangement  should 
be  made  to  have  the  office  of  the  association  oj^en  on  all 
business  days  during  business  hours.  Circumstances 
sometimes  make  this  arrangement  inconvenient  or  im- 
possible. In  such  cases  it  is  usual  to  select  some  day  in 
the  week  or  some  evening  in  the  week  as  the  regular  time 
for  receiving  payments.  The  regular  meetings  of  the  board 
of  directors  for  the  transaction  of  their  business  should 

1142] 


HOW  TO  ORGANIZE. 

be  held  at  least  weekly.  In  some  communities  the  prac- 
tice still  prevails  of  having  the  entire  board  of  directors 
attend  the  meetings  of  the  association  and  supervise  and 
assist  the  receipt  of  money,  and  making  of  entries  of  the 
same  on  the  pass-books,  books  and  records  of  the  asso- 
ciation. This  practice,  however,  is  changing.  In  prac- 
tice it  has  been  found  that  a  single  official  can  really 
handle  the  business  of  the  association  more  rapidly  and 
accurately  than  can  be  done  when  the  system  requires 
a  number  of  officers  to  handle  each  transaction.  How- 
ever, these  minor  details  can  be  easily  adjusted  by  each 
association  and  handled  in  such  way  as  may  be  found 
most  convenient  and  efficient. 

New  Regulations. 

The  suggestions  of  this  chapter  are  necessarily  of  a 
general  character.  In  each  State  they  must  be  carried  out 
according  to  the  local  State  statutes.  Many  laws  are 
being  enacted  that  require  occasional  changes  in  the  de- 
tails of  the  organization  and  the  practical  work  of  asso- 
ciations from  time  to  time. 


[143] 


CHAPTER  IX. 

Stock  and  Stockholders. 

Tlie  stock  of  a  corporation  is  defined  by  Webster  as 
"The  capital  of  an  incorporated  company,  in  transfer- 
able shares  of  a  specified  amount."  Attention  has  been 
called  in  a  previous  chapter  of  this  book  to  an  import- 
ant distinction  between  the  capital  stock  of  a  building 
association  and  stock  in  an  ordinary  corporation.  The 
stock  in  an  ordinary  corporation  is  a  fixed,  permanent, 
non-withdrawable  investment.  As  stated  in  the  definition 
above  quoted,  ordinary  corporation  stock  is  transferable, 
but  is  not  subject  to  withdrawal.  The  ordinary  corpora- 
tion is  not  permitted  to  traflfic  in  its  own  stock.  The 
holder  cannot  present  ordinary  corporation  stock  to  the 
office  of  the  company  and  demand  a  return  of  his  money, 
while  stock  in  a  building  association  may  be  paid  off  by 
the  association  under  the  rules  and  by-laws  which  it  has 
adopted  for  its  government. 

At  the  organization  of  a  building  association  a  certain 
amount  of  capital  is  fixed  and  specified  in  its  charter  or 
articles  of  incorporation,  an  amount  that  it  is  the  aim 
of  the  association  to  accumulate.  This  common  fund 
or  authorized  capital  is  divided  into  equal  shares.  The 
number  and  value  of  shares  into  which  this  stock  is 
divided  is  fixed  by  the  general  statute  and  the  charter 
of  the  association.  A  person  subscribing  for  or  other- 
wise becoming  the  owner  of  one  or  more  of  these  shares 
is  known  as  a  shareholder,  or  stockholder.  This  sub- 
scription specifies  the  manner  in  which  he  agrees  to 
pay  into  the  association  the  sum  represented  by  the  stock 

[144] 


STOCK  AND  STOCKHOLDERS. 

which  he  owns,  and  is  sometimes  to  be  paid  in  regular, 
periodic  installmens ;  sometimes  in  irregular  payments, 
as  he  may  find  convenient ;  and  sometimes  to  be  paid  in 
full  in  a  lump  sum. 

In  some  States  the  statute  limits  the  number  of  shares 
that  may  be  held  by  any  one  person ;  in  other  States  the 
State  law  limits  the  amount  of  stock  which  any  one 
person  may  hold ;  in  still  other  cases,  no  limit  is  fixed 
to  the  number  of  shares  that  may  be  held,  the  provision 
being  that  only  a  limited  number  of  shares  shall  be  voted 
by  the  holder.  The  minimum  amount  of  stock  to  be  taken, 
that  is  to  say,  the  number  of  shares  for  which  subscrip- 
tions must  be  made  before  an  association  can  begin 
operation  is  generally  determined  by  the  State  Laws 
and  the  rules  of  the  association. 

Increase  of  Stock, 

The  maximum  capital  stock  of  an  association  is  fixed 
in  the  articles  of  incorporation  and  by  the  constitution. 
But  in  most  States  it  is  competent  for  the  association, 
by  virtue  of  authority  given  it  for  that  purpose  in  the 
charter,  to  increase  the  stock  within  the  limits  estab- 
lished by  the  statute,  and  in  the  manner  required  to 
legalize  such  change.  This  increase  of  stock  should  be 
made  only  when  all  other  stock  is  taken  by  bona  fide  sub- 
scription, since  its  issue  involves  additional  expense.  An 
increase  of  stock  must  always  be  made  in  strict  accord- 
ance with  the  legal  provisions,  and  should  therefore,  be 
undertaken  only  under  competent  legal  advice.  There 
can  be  no  uniform  rule  laid  down  concerning  increase  of 
stock.  Such  increase  depends  upon  the  nature  of  the 
association,  the  rules  it  has  adopted,  and  the  provisions 
of  the  statutes  under  which  it  operates.  In  terminating 
associations,  for  instance,  there  can  be  no  arrangement 
for  increase  of  stock  as  the  term  is  generally  understood. 

[ii:.] 


CHAPTER  IX. 

Stock  Is  Property. 

The  ownership  of  a  share  or  shares  of  stock  in  a  build- 
ing association  does  not  give  the  holder  a  proprietary 
right  in  the  property  of  the  association.  It  simply  gives 
him  the  right  to  share  in  the  surplus  profits  obtained  from 
the  use  and  investment  of  the  revenues  of  the  association. 
The  funds  of  the  association  may,  for  instance,  be  invested 
largely  in  real  estate.  The  shares  are  nevertheless 
merely  personal  property  and  do  not  entitle  the  holder  to 
any  individual  proprietorship  in  the  real  estate  belonging 
to  the  association. 

Shares  Transferable. 

Shares  of  stock  in  a  building  association  may,  like  other 
personal  property,  be  transferred,  from  one  owner  to 
another.  The  transfer  is  made  "by  assignment  and  de- 
livery." The  method  of  transfer  should  always  be  speci- 
fied in  the  constitution  or  by  laws  of  an  association.  Of 
course  no  transfer  of  stock  can  be  made  when  such 
transfer  trespasses  in  any  way  upon  the  corporate  rights 
of  the  association.  A  member  who  is  in  arrears  cannot 
transfer  his  stock  until  he  makes  settlement  to  date.  On 
the  other  hand  the  association  cannot  resist  such  transfer 
where  the  holder  of  the  stock  has  complied  with  all  the 
necessary  conditions.  Usually  a  fee,  called  the  transfer 
fee,  is  charged  to  the  person  to  whom  a  transfer  is  made. 
This  is  an  equivalent  to  the  admission  fee  charged  to  new 
members. 

Stock  Payments  or  Dues. 

A  member  of  an  association  is  the  holder  of  some  part 
of  its  capital  stock.  The  par  or  paid-up  value  of  a 
share  is  fixed  in  the  constitution  at  such  amount  as 
may  be  decided  upon,  generally  from  $ioo  to  $500.   This 

[146J 


STOCK  AND  STOCKHOLDERS. 

par  value  of  a  share  is  its  expected  value.  Its  actual 
value  is  a  very  different  thing,  especially  during  the  first 
years  of  a  shareholders'  membership.  A  subscriber  for 
a  share  of  stock  of  the  par  value  of  $500  has  simply 
made  an  agreement  to  pay  into  the  association  a  regular 
weekly  or  monthly  installment  of  a  certain  amount, 
v^hich  periodical  payments  are  to  be  continued  until  the 
accumulated  payments,  together  with  the  accrued  divi- 
dends thereon,  shall  amount  to  the  sum  stipulated  as 
the  full  value  of  the  share.  These  periodical  install- 
ments are  called  stock-payments,  or  dues.  It  is  seen, 
therefore,  that  the  actual  value  of  a  share  at  any  time  is 
determined  solely  by  the  amount  paid  in  and  the  profits 
accumulated  up  to  that  date  and  not  at  all  by  its  face 
value.  The  regular  payment  of  these  periodical  contri- 
butions by  members  is  the  prime  dependence  of  the 
association  for  its  success  as  an  enterprise.  The  constitu- 
tion and  by-laws  of  every  association,  therefore,  must 
prescribe  carefully  the  time  and  manner  of  making  these 
payments.  The  fixing  of  penalties  for  default  of  payment 
may  also  be  necessary.  This  subject  is  discussed  further 
in  its  appropriate  place  in  another  chapter.* 

Paid-Ui,  Stock. 

In  some  associations  provision  is  made  for  members  to 
pay  in  the  full  maturity  or  par  value  of  their  shares  at 
any  time,  and  a  certificate  of  paid-up  stock  is  then  issued. 
The  owners  thereof  are  entitled  to  receive  in  cash  the 
amount  of  all  dividends  declared  thereon,  subject  to  such 
conditions  or  limitations  as  the  board  of  directors  of  each 
particular  association  may  have  adopted.  In  some 
instances  these  shares  participate  as  fully  in  the  profits  as 
the  regular  installment  shares;  but  in  other  cases  only  a 
fixed  rate  of  interest  is  allowed,  while  the  holders  of  the 

•  Se«  Chapters  VII   and  XIJ. 

[147J 


CHAPTER  IX. 

shares  assigfn  io  the  association  all  rights  to  profits 
ahove  that  amount.  In  some  cases  the  holders  of 
reijfular  installment  shares  that  have  arrived  at  maturity 
value,  do  not  desire  to  draw  their  money,  but  prefer  to 
leave  it  with  the  association  as  an  investment.  In  associa- 
tions where  this  practice  is  followed,  the  holders  of 
matured  shares  receive  certificates  for  the  same,  which 
are  usually  governed  by  the  same  conditions  as  are 
attached  to  paid-up  shares. 

It  was  formerly  the  custom  (still  followed  to  a  great 
extent)  to  pay  ofif  shares  as  they  matured  in  the  regular 
course  of  the  association.  In  a  tcrjuinating  association 
this  of  course  must  be  done.  In  the  serial  associations, 
where  all  the  stock  of  each  series  matures  at  one  time, 
it  is  necessary  that  there  be  a  large  accumulation  of  funds 
toward  the  end  of  the  series  to  meet  the  stock  payments 
which  will  then  become  due.  The  disadvantages  arising 
from  such  a  necessity  are  readily  understood.  In  the 
permanent  or  perpetual  associations,  where  shares  are 
maturing  in  small  numbers  from  time  to  time,  this  large 
accumulation  of  funds  to  pay  them  off  is  not  a  matter 
of  so  much  consequence.  The  constant  addition  of  new 
members  supplies  the  necesary  funds  to  meet  the  with- 
drawal of  the  maturing  shares. 

It  is  always  a  question  worth  considering  as  to  whether 
the  funds  should  be  withdrawn  from  the  association  when 
shares  mature.  On  the  one  hand  the  association  may  be 
able  to  use  the  money  to  good  advantage  and  may  be 
crippled  in  its  operations  by  its  withdrawal.  This  is 
especially  true  in  the  case  of  a  serial  association,  for  it  is 
necessary  that  the  association  hoard  its  money  quite  a 
while  in  advance  and  then  to  part  with  the  large  amount 
thus  saved  up.  Of  course,  this  must  limit  its  operations. 
On  the  other  hand,  unless  the  owner  of  the  stock  has  some 
specific  use  for  it,  as  in  the  purchase  of  property  or  pay- 

[148] 


STOCK  AND  STOCKHOLDERS. 

ing  off  a  mortgage,  or  something  of  that  nature,  it  may- 
be better  for  him  and  he  may  prefer  to  leave  it  in- 
vested in  the  association  than  to  draw  it  out.  The  pos- 
session of  so  much  money  immediately  in  hand  brings 
with  it  the  temptation  to  spend  it  needlessly,  or  to  risk 
it  in  some  speculative  enterprise.  In  the  case  of  a  serial 
association  the  placing  of  so  much  ready  capital  in  the 
hands  of  so  many  persons  whose  stock  has  matured  may 
result  in  the  needless  expenditure  of  a  large  part  of  the 
money  which  might  have  been  reserved  for  better  uses. 

New  features  have  recently  been  introduced  in  some 
associations  in  connection  with  the  issuance  of  paid- 
up  stock  certificates.  Under  the  old  rule  the  certificates 
are  redeemable  only  by  special  action  of  the  board  of 
directors.  The  change  consists  in  the  attachment  of  a 
series  of  coupons  to  the  certificates.  This  plan  is  possible 
in  associations  which  have  an  assured  prospect  of  having 
money  to  sell  or  loan  for  some  time  ahead.  The  coupons 
specify  the  rate  of  interest.  A  copy  of  these  coupons  will 
be  found  in  the  chapter  on  Forms.  The  use  of  the  cou- 
pons saves  the  secretary  the  trouble  of  issuing  special 
vouchers  for  dividends  on  paid-up  stock.  In  some  cases 
these  coupons  are  accepted  as  cash  for  the  amount  of  divi- 
dend. It  is  evident  that  it  is  only  under  certain  circum- 
stances that  these  features  can  be  adopted  and  followed. 
The  rate  of  guaranteed  dividend  must  be  so  low  as  to 
justify  the  directors  in  adopting  the  plan,  and  there  must 
be  some  positive  assurance  that  it  can  be  continued. 

The  rules  of  an  association  in  reference  to  paid-up 
stock  should  be  most  carefully  drawn  so  as  to  cover 
all  contingencies  or  emergencies. 

.'\ny  member  whose  stock  has  matured  should  consider 
very  carefully  whether  or  not  it  will  be  best  for  him 
to  draw  out  his  money  or  take  a  paid-up  stock  certificate 
and  leave  the  money  in  the  association  as  an  investment. 

[I'J^l 


CHAPTER  IX. 

Other  Facts  Concerning  Stock. 

Various  other  questions  relating  to  stock  have  been 
determined  by  general  usage  or  passed  upon  by  the 
courts.  Associations  have  the  right  of  lien  upon  shares, 
which  extends  to  all  liabilities  of  shareholders,  for  dues, 
fines  and  other  lawful  charges.  An  association,  in  ex- 
treme cases,  may  collect  by  suit  the  dues  of  delinquent 
members  who  are  endeavoring  to  work  injury  to  the  asso- 
ciation. In  cases  where  the  shareholder  has  borrowed 
money  from  the  association  his  regular  dues  are  not  to 
be  credited  upon  his  loan  but  are  to  be  applied  upon  his 
stock  account  just  as  the  dues  of  any  other  member.  He 
may,  however,  at  any  time  have  its  accumulated  stock- 
payments  applied  upon  his  debt;  or,  if  the  association 
holds  a  lien  upon  his  shares  for  security  of  his  indebted- 
ness, the  association  may,  in  case  of  his  default  of  obli- 
gations, apply  his  accumulated  stock-payments  to  can- 
cel his  indebtedness  as  far  as  they  will  reach.  In  such 
cases  defaulting  members  have  the  benefit  only  of  the 
aggregate  of  their  paid-up  subscriptions.  But  if  a  mem- 
ber voluntarily  repays  the  money  thus  applied,  there  is 
added  the  declared  portion  of  the  profits  of  the  associa- 
tion up  to  the  time  of  the  repayment,  provided  he  has  not 
assigned  his  shares  to  a  third  party. 

An  assignee  or  executor  of  a  member  may  exercise 
the  same  rights  in  the  control  of  stock  as  the  share- 
holder himself.  Stock  may  be  assigned  to  an  asso- 
ciation by  a  borrowing  member  as  collateral  security 
for  his  loan,  and  it  is  the  usual  practice  of  asso- 
ciations to  require  this  assignment.  Where  the  stock 
is  assigned  to  an  association  as  collateral  security  and 
real  estate  is  at  the  same  time  mortgaged,  the  liabil- 
ity falls  first  upon  the  stock.  If  this  fails  to  extin- 
guish the  indebtedness  then  the  real  estate  or  other  col- 
lateral security  becomes  liable. 

[150] 


STOCK  AND  STOCKHOLDERS. 

In  order  that  no  question  may  arise  in  reference  to  any 
of  these  miscellaneous  matters  they  should  all  be  covered 
as  nearly  as  possible  by  explicit  rules  in  the  constitution 
and  by-laws  of  an  association.  The  practice  in  connec- 
tion with  many  features  of  work  is  not  at  all  uniform 
in  associations.  Hence  the  necessity  that  each  associa- 
tion carefully  define  in  its  rules  the  course  which  it  will 
adopt  in  connection  with  all  matters  concerning  which 
differences  of  opinion  might  arise  in  the  absence  of  rules 
specially  governing  them. 

Certificates  of  Deposit. 

In  a  number  of  the  States  where  special  deposits  are 
received  from  those  who  do  not  care  to  become  members 
of  the  association  and  who  do  not  care  to  assume  any 
liability  as  to  membership,  persons  may  deposit  the  money 
with  the  association  along  the  same  lines  as  it  is  deposited 
in  regular  savings  banks,  trust  companies  and  similar 
institutions.  The  board  of  directors  usually  fix  a  certain 
rate  of  interest  to  be  paid  thereon,  payable  semi-annually 
or  annually,  as  the  case  may  be,  and  certain  conditions 
relating  to  these  deposits. 


[1611 


CHAPTER  X. 

Definition  of  Stock  and  Stockholders. 

Difference  Defined. 

The  difference  between  a  stockholder  in  a  building, 
loan  and  savings  association  and  that  in  an  ordinary  cor- 
poration, for  usual  business  purposes,  lies  in  the  fact 
that  in  the  latter  the  member  or  stockholder  buys  his 
stock  and  pays  for  it  at  once,  and  usually  is  not  called 
upon  for  any  further  payment.  His  profits,  or  the  re- 
sults of  his  investments  in  such  stock,  are  derived 
through  dividends,  the  value  of  the  shares  depending 
upon  the  successful  operation  of  the  business.  They  often 
go  above  par  when  the  corporation  is  doing  a  profitable 
business,  and  the  value  often  drops  far  below  par  when 
disaster  comes. 

In  the  building,  loan  and  savings  association,  on  the 
contrary,  the  stockholder  or  member  pays  a  stipulated 
minimum  sum,  say  $i.oo,  when  he  takes  his  member- 
ship and  buys  a  share  of  stock.  He  then  continues  to 
pay  a  small  sum  each  week  or  month  until  the  aggregate 
of  sums  paid,  augmented  by  the  profits,  amounts  to  the 
maturing  value  of  the  stock,  usually  from  one  to  five 
hundred  dollars.  At  this  time  the  stockholder  is  en- 
titled to  the  full  maturing  value  of  the  share,  and  he 
surrenders  the  same.  Or  he  may  receive  a  certificate  of 
paid-up  stock,  if  he  chooses  to  leave  the  money  with 
the  association. 

It  is  clearly  seen,  then,  that  the  capital  of  a  building, 
loan  and  savings  association  consists  of  the  combined 

[152] 


DEFINITION  OF  STOCK  AND  STOCKHOLDERS. 

savings  of  its  members,  paid  to  the  association  upon 
shares  of  stock,  increased  by  the  interest  and  premium 
which  the  association  has  received  on  loans  made  by  it 
from  the  savings  of  its  members  thus  paid  to  the  asso- 
ciation, and  from  all  other  sources  of  income.  The 
amount  of  capital  of  the  association,  therefore,  increases 
from  month  to  month  and  year  to  year. 

Serial  Associations. 

In  the  serial  associations,  shares  are  usually  issued  in 
series.  When  the  second  series  is  issued,  the  issue  of  the 
stock  of  the  prior  series  ceases.  Profits  are  distributed 
and  losses  apportioned  before  a  new^  series  is  issued. 
The  term  during  which  a  series  is  opened  for  subscrip- 
tion diflfers,  but  it  usually  extends  for  three  or  six 
months,  and  sometimes  a  year.  Prior  to  the  maturing  of 
a  share,  it  has  two  values.  One  is  called  the  holding 
or  book  value,  and  the  other  the  withdrawal  value.  The 
former  is  ascertained  by  adding  all  the  dues  that  have 
been  paid  to  the  profits  that  have  accrued :  that  is  to  say, 
the  holding  value  is  the  actual  value  of  a  share  at  any 
particular  time. 

The  withdrawal  value  on  the  contrary  is  that  amount 
which  the  association  is  willing  to  pay  to  a  shareholder 
who  desires  to  sever  his  connection  with  the  association 
prior  to  the  date  at  which  his  share  will  mature.  Every 
association  has  full  regulations  prescribed  in  its 
constitution  and  by-laws  on  all  such  matters,  as  well 
as  on  matters  pertaining  to  expenses,  notice  of  with- 
drawal and  all  the  methods  and  processes  necessary  for 
the  safe  conduct  of  the  business. 

The  purchase  of  a  share  binds  the  shareholder  to  the 
necessity  of  keeping  up  his  dues  and  thus  secures  to  him 
all  the  benefits  of  his  savings.    This  accomplishes  the  first 

1153] 


CHAPTER  X. 

feature  of  the  motive  of  a  building-,  loan  and  savings 
association.  The  second  is  that  of  enabling-  a  person  to 
borrow  money  for  building  or  other  purposes. 

Borrowing  J^emhers. 

Ordinarily  a  shareholder  who  desires  to  build  a  house 
and  has  secured  a  lot  for  the  purpose  makes  application 
to  borrow  money  from  the  association  of  which  he  is  a 
member.  Suppose  a  person  who  has  secured  a  lot  wishes 
to  borrow  $i,ooo  for  the  erection  of  a  home.  He  must 
be  the  holder  of  five  shares  in  the  association,  each  share 
having  as  its  maturing  value,  say  $200.00.  His  five 
shares,  therefore,  when  matured,  will  be  worth  $1,000, 
the  amount  of  money  which  he  wishes  to  borrow.  The 
process  by  which  he  can  borrow  this  money  differs  from 
that  of  borrowing  money  from  savings,  trust  or  others 
financial  institutions. 

In  a  building,  loan  and  savings  association  the  money 
was  formerly  put  up  at  auction,  usually  in  open  meet- 
ing on  the  night  or  at  the  time  of  the  payment  of  the 
dues.  Those  who  desired  to  borrow,  bid  a  premium 
above  the  regular  rate  of  interest  charged,  and  the  one 
bidding  the  highest  premium  was  awarded  the  loan. 
There  has  been  a  decided  change  in  this  direction.  Today 
the  matter  of  premiums  on  loans  is  being  eliminated 
very  rapidly,  and  the  association  aims  to  furnish  its 
borrowers  money  at  as  low  a  rate  of  interest  as  possible. 
The  persons  desiring  to  make  a  loan  now  fill  out  an 
application  for  a  loan  which  is  filed  in  numerical  order, 
and  then  taken  up  at  the  meeting  of  the  board  of  direc- 
tors. The  person  who  wishes  to  build  his  home,  there- 
fore, and  desires  to  borrow  $1,000,  must  have  subscribed 
for  five  shares  of  stock  of  $200.00  each  in  the  association, 
and  after  the  directors  have  passed  upon  the  application, 
the  $1,000  will  be  loaned  to  him,  if  acted  upon  favor- 

[154] 


DEFINITION  OF  STOCK  AND  STOCKHOLDERS. 

ably.  A  borrower  need  not  be  a  member  for  any  length 
of  time  before  he  applies  for  a  loan.  The  making  of  the 
loan  and  subscribing  for  the  shares  may  all  be  done  at 
the  same  time  as  parts  of  the  same  transaction.  To 
secure  this  $i,ooo  the  person  gives  the  association  a 
mortgage  on  the  property,  and  pledges  his  five  shares 
of  stock.  To  cancel  this  debt  he  is  constantly  paying  his 
monthly,  semi-monthly  or  weekly  dues,  until  such  time 
as  the  payment  of  dues,  plus  the  accumulation  of  profits, 
matures  the  shares  at  $200  each.  At  this  time,  then, 
the  shares  are  surrendered  and  the  debt  on  the  property 
canceled.  The  question  as  to  whether  this  method  of 
obtaining  money  for  the  building  of  homes  or  for  other 
purposes,  is  more  or  less  economical  from  that  of  obtain- 
ing it  from  the  ordinary  savings  banks,  trust  companies  or 
other  financial  institutions,  has  been  discussed  at  another 
place. 

Safety  of  These  Associations. 

It  will  be  seen  at  once  that  the  investment  in  a  building 
loan  and  savings  association  is  as  nearly  absolutely  safe 
as  it  can  be,  for  the  paid-in  dues  and  the  accumulated 
profits,  which  give  the  active  capital  of  the  association, 
are  loaned  as  fast  as  they  accumulate.  They  are  usually 
loaned  immediately  upon  real  estate  or  upon  the  stock  of 
/the  association  itself.  The  opportunities  for  embezzling 
or  for  the  shrinking  of  securities  are  reduced  to  the 
minimum,  and  almost  absolute  safety  of  the  invest- 
ment is  secured.  In  referring  to  the  enormous  amount  of 
money  handled  by  the  building,  loan  and  savings  asso- 
ciations of  the  United  States,  the  Hon.  Carroll  D. 
Wright,  Commissioner  of  Labor,  in  his  most  excellent 
report,  published  in  1893,  from  which  extracts  are  given, 
states  the  following: 

[155] 


CHAPTER  X. 

"A  business  represented  by  an  annual  income  of,  at  that  time 
stated  $-loO,C(i7,594,  conducted  quietly  with  little  or  no  advertising 
and,  as  stated,  without  the  experienced  banker  in  charge,  shows  that 
the  conunon  people  in  their  own  ways  are  quite  competent  to  take 
care  of  their  savings,  especially  when  it  is  known  that  but  35  of  the 
associations  then  in  existence,  showed  a  net  loss  at  the  end  of  their 
last  fiscal  year,  and  that  this  loss  amounted  to  only  $23,332.20.  Of 
course  associations  disband  for  the  want  of  business  or  from  some 
other  cause,  but  when  they  disband,  loss  does  not  occur,  because  the 
whole  business  of  the  association  consists  of  its  loans,  and  these 
loans  are  to  its  own  shareholders,  as  a  rule,  who  hold  the  securities 
in  their  associated  forms.  A  disbanded  association,  therefore, 
simply  returns  to  its  own  members  their  own  property." 


\m\ 


CHAPTER  XI. 

Insurance. 

Insurance  Features. 

The  matter  of  various  forms  of  insurance  that  can  be 
successfully  introduced  in  connection  with  this  work  has 
been  given  great  consideration  by  the  leaders  of  the  move- 
ment. When  we  consider  the  line  of  credit  extended  to 
the  wage-earner,  it  is  no  more  than  proper  that  these 
credits  extended  should  be  protected.  To  meet  this 
demand  various  forms  of  insurance  have  been  devised. 

Health,  Accident  and  Disability  Insurance. 

The  protection  afforded  not  only  to  the  member  but 
to  the  association  is  of  importance.  Prominent  insurance 
companies  have  now  given  this  matter  careful  considera- 
tion, and  have  submitted  propositions  covering  this  idea. 
In  case  a  member  meets  with  an  accident,  or  becomes  sick, 
or  disabled,  these  companies  will  pay  him  a  regular 
indemnity  as  provided  in  his  policy.  In  many  cases  the 
homes  of  borrowers  would  have  been  saved  to  their  fam- 
ilies had  these  precautions  been  taken. 

The  payments  covering  this  in.surance  are  made  at  regu- 
lar stated  intervals,  to  the  secretary  or  some  other  person 
designated  for  this  purpose,  so  that  the  members  are  not 
put  to  any  inconvenience  in  the  matter.  We  are  of  the 
opinion  that  while  this  may  be  a  difficult  practice  for 
associations  to  adopt  in  a  general  way,  .still  this  idea  could 
be  inaugurated  on  all  new  business  that  is  written.  In 
fact,  when  an  application  for  a  loan  is  made  to  the  asso- 
ciation, it  is  ju.st  as  proper  to  ask  the  applying  member 
if  he  has  made  these  provi.sions  as  it  is  to  ask  if  he  has  a 

Ij:,71 


CHAPTER  XL 

fire  insurance  on  his  house.  Statistics  have  proven  that 
the  loss  of  homes  through  fire  is  but  a  small  percentage 
as  compared  with  the  numlKr  of  members  who  become 
sick  or  meet  with  accidents. 

Tornado  Insurance. 

This  subject  should  be  carefully  taken  into  considera- 
tion by  associations  making  loans  on  property,  as  nearly 
every  month  in  the  year  some  damage  is  caused  to 
some  member  through  the  force  of  windstorms,  cyclones, 
tornadoes,  etc.  It,  therefore,  becomes  necessary  for 
those  having  charge  of  the  association's  interests  to  see 
that  each  borrower  has  his  property  protected  by  a  proper 
tornado  policy  in  some  responsible  company. 

Life  Insurance. 

For  the  purpose  of  investment  and  as  a  security  for 
loans,  some  of  the  associations  issue  in  connection  there- 
with, so-called  life,  protected  or  endowment  stock.  This 
stock  is  issued  for  the  benefit  of  such  members  as  may 
desire  to  protect  their  investments  from  the  consequences 
of  death  before  the  maturity  of  their  stock,  and  especially 
for  the  benefit  of  borrowing  members.  Arrangements 
are  made  by  such  associations  with  a  responsible  life 
insurance  company  in  which  the  latter  guarantees  the 
payment  of  life  insurance  in  case  of  death  for  the  full  face 
value  of  endowment  stock,  held  by  the  member  at  the 
time  of  his  death.  Members  who  wish  to  avail  them- 
selves of  such  advantages  must  submit  to  the  usual  med- 
ical examination. 

In  addition  to  their  regular  dues,  an  insurance  premium 
must  be  paid,  graduated  according  to  age.  At  the 
1909  convention  of  the  United  States  League,  Dr.  Pra- 
nard,  of  Paris,  France,  had  the  following  interesting 
suggestion  to  make  along  these  lines : 

tl58J 


INSURANCE. 

"I  speak  of  insurance  in  building  associations.  I  expressed,  in  the 
conclusion  of  my  book  on  'American  Building  Associations,'  the  hope 
of  seeing  American  people  adhere  to  the  plan  of  life  insurance  policy 
as  an  additional  security.  All  the  ideas  expressed  by  Mr.  Brackett  I 
support  strongly,  and  am  pleased  to  state  that  they  are  emphasized 
upon  by  Belgian  and  French  specialists.  Nothing  more  can  be  said 
after  Mr.  Brackett's  remarks  about  the  advantages  of  the  plan,  both 
for  the  society  and  for  the  borrower  himself  and  his  family.  But 
I  should  like  to  tell,  in  a  few  words,  the  difficulties  it  encounters,  and 
how,  according  to  the  Belgian  practice,  they  are  met  with. 

The  system  prevailing  amongst  us  is  that  of  the  so-called  'reduc- 
ing term  policy,'  under  which  'the  amount  of  the  insurance  is  reduced 
each  year,  as  the  amount  required  for  a  discharge  of  the  mortgage 
of  the  borrower  is  reduced  by  his  monthly  payments,  his  premium^ 
being   each   year    correspondingly    reduced.' 

From  this  excellent  definition  of  the  plan  it  follows  that  the 
premium  of  the  first  year,  destined  to  face  the  most  important  risk, 
is  the  highest,  and  the  premiums  of  the  subsequent  years  decrease 
with  the  risk  till  the  mortgage  is  paid  off. 

There  are  three  ways  of  paying  premiums:  1st,  yearly,  and  then 
the  amount  of  the  premiums  decreases  with  the  risk;  2d,  in  gross, 
at  first,  for  the  whole  time  of  the  contract ;  3d,  by  yearly  equal 
installments  whose  amount  is  determined  by  the  premium  of  the  first 
year,  and  which,  consequently,  are  paid  during  a  part  of  the  insurance 
period  only. 

The  three  systems  present  the  .same  inconveniences ;  they  neces- 
sitate, at  the  beginning,  the  greatest  sacrifices  from  the  borrower. 
The  desirable  solution  would  be  the  averaging  of  the  premiums  on 
the  basis  of  the  premium  paid  in  the  middle  of  the  period ;  but  such 
a  solution  is  not  possible  for  the  insurance  company,  for  the  com- 
pany would  receive,  during  the  first  half  of  the  contract,  less  than  the 
price  of  the  risk ;  there  would  be  what  is  called  a  'negative  reserve.' 

The  difficulty  is  happily  solved  by  the  interference  of  the  build- 
ing society.  The  society  advances  the  amount  of  the  premium  to 
the  borrowers  and  incorporates  it  in  the  loan,  combining  the  annuities 
so  that  they  are  equal ;  the  portion  representing  the  paying  off  is, 
during  the  first  years,  less  important,  while  the  portion  of  the  insur- 
ance is  higher ;  but  the  first  one  goes  on  increasing  as  the  second 
one  is  diminishing.  With  this  interference  all  interests  arc  safe- 
guarded ;  the  insurance  company  receives  the  premium  as  is  required 
for  its  .security,  and  the  borrower  pays  in,  quarterly  or  monthly,  the 
.same  averaged  amount  as  long  as  his  mortgage  is  not  discharged." 


CHAPTER  XII. 

Duties  and  Rights  of  Members. 

Membership  in  a  building  association  is  acquired  by 
becoming  a  holder  of  its  stock.  All  persons  or  corpora- 
tions legally  capable  of  making  contracts  may  become 
members  of  an  association.  In  some  States,  by  special 
legislation,  membership  is  permitted  to  minors  and  mar- 
ried women,  who  under  the  general  law  in  those  States 
would  be  debarred.  As  a  rule  one  association,  however, 
may  not  become  a  member  in  another. 

There  are  two  classes  of  members — savers  and  bor- 
rowers. Generally  the  membership  is  sought  for  the 
purpose  of  making  a  safe  deposit  of  the  small  surplus 
earnings  of  persons,  who  otherwise  would  have  to  keep 
this  surplus  at  home  where  it  is  unsafe  and  liable  to  be 
expended.  These  are  called  saving  members.  Persons 
may  likewise  become  members  for  the  purpose  of  ob- 
taining a  loan,  and  these  are  called  borroiuing  members. 

Subscribers  for  stock  are  sometimes  required  to  pay 
a  special  admission  fee  and  also  purchase  a  pass-book. 
Dues  on  stock  begin  from  the  time  of  subscription.  In 
associations  as  now  conducted  on  the  permanent  plan, 
payment  of  back  dues  is  not  required,  all  stock  dating 
from  day  of  actual  issue.  But  dues  may  be  paid  in 
advance,  in  part  or  in  full.  When  paid  in  advance  by 
the  partial  method  in  some  associations  they  draw  divi- 
dends. When  paid  in  advance  in  full,  certificates  of  paid- 
up  stock  should  be  issued. 

IIGOJ 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

A  pass-book  is  prima  facie,  and  generally  sufficient 
evidence  of  membership.  An  association  cannot  deny 
membership  to  any  person  from  whom  it  continues  to 
accept  dues.  A  person  who,  as  a  member,  receives  the 
benefits  arising  from  membership,  is  estopped  from 
denying  his  membership.  Membership  is  terminated  by 
death,  by  a  transfer  of  shares,  by  forfeiture,  by  volun- 
tary withdrawal,  by  the  dissolution  of  the  association, 
or  by  the  expiration  of  the  series  in  which  the  member's 
stock  stands.  Where  a  member  becomes  a  borrower,  his 
membership  may  cease  by  special  contract  with  the  asso- 
ciation. 

Duties  of  Jdemhers, 

A  person  who  becomes  a  subscriber  for  the  stock  of  a 
building  association  thereby  enters  into  a  contract  with 
the  association,  all  the  terms  of  which  he  is  legally  bound 
to  fulfill.  Moreover,  by  subscribing  to  the  constitution 
and  by-laws,  or,  indeed,  even  if  this  formality  be  omitted, 
he,  as  a  shareholder,  must  give  his  obedience  to  the  rules 
of  the  association.  A  member  must  pay  his  dues,  unless 
he  becomes  unable  to  do  so,  when  he  should  give  proper 
notice  of  withdrawal.  A  member  should  give  the  asso- 
ciation his  personal  services  to  a  reasonable  extent  by 
attendance  upon  the  meetings  and  by  the  faithful  dis- 
charge of  the  functions  of  such  offices  as  he  may  be 
elected  or  appointed  to  fill.  Each  member  of  an  asso- 
ciation must  bear  his  proportionate  share  of  its  expenses. 
In  case  of  loss  he  must  also  share  in  this.  A  member  of 
an  association  cannot  withdraw  in  order  to  evade  his 
liability  for  expenses  and  losses.  His  liability  to  con- 
tribute to  the  expenses  ceases  only  with  his  membership. 

Fines  and  Forfeitures. 

There  has  been  a  great  change  of  ideas  relative  to  the 
fines  and   ffjrfeitures  to  be  imposed  on  the  members  of 

[101] 


CHAPTER  XII. 

the  associations.  In  fact,  this  item  is  gradually  disappear- 
ing from  the  reports  of  well  regulated  associations.  It 
has  been  customary  to  insert  into  the  constitution  and  by- 
laws provisions  relative  to  the  imposition  of  these  fines. 
Directors  of  associations  generally  possess  discretionary 
powers  in  regard  to  the  remission  of  fines.  It  is  thought 
best  to  have  these,  so  that  if  a  borrowing  member  be- 
comes delinquent,  these  fines  may  be  imposed  so  as  to 
provide  for  the  associations  a  revenue  in  case  they  are 
compelled  to  foreclose.  The  delinquent  member  is  thus 
made  to  share  the  expense  occasioned  by  legal  action. 

To  the  fair-minded  director  a  fine  often  suggests  some- 
thing of  injustice  or  inequity.  While  it  represents  a 
source  of  profit  to  the  association,  it  may  add  to  the  bur- 
den of  an  already  overburdened  member.  The  delin- 
quency may  arise,  indeed,  through  some  misfortune 
which  will  appeal  strongly  to  the  sympathies  of  the 
officers  and  other  members.  At  such  a  time  of  adversity 
the  addition  of  these  fines  serves  to  build  up  a  barrier  be- 
tween the  member  of  the  association  and  the  organization 
itself,  and  to  defeat  the  delinquent's  only  hope  of  es- 
cape. 

On  this  account  it  has  been  deemed  advisable  to  discard 
the  whole  system  of  fines.  All  will  agree  that  the  im- 
position of  extortionate  fines  is  an  evil.  Directors  should 
be  given  discretion  in  regard  to  the  remission  of  fines, 
and  should  inquire  carefully  into  the  circumstances  of 
delinquents  and  always  remit  a  fine  when  it  seems  to 
them  just  and  right  so  to  do.  If  the  member  is  a  bor- 
rower and  has  become  a  delinquent  through  misfortune 
or  causes  for  which  he  is  not  responsible,  his  case  should 
be  inquired  into  carefully,  and  he  should  be  aided  in  any 
way  possible  by  the  association.  In  such  cases  the  direc- 
tors frequently  permit  borrowers  to  pay  interest  only 
for  a  specified  time.     This  is  only  a  part  of  the  spirit  of 

[1C2] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

co-operation  and  mutual  interest,  upon  which  such  socie- 
ties are  founded.  Such  care  and  leniency  on  the  part  of 
directors  may  go  far  towards  popularizing  an  association 
and  thus  add  to  its  prosperity  and  usefulness. 

Of  course,  what  is  said  above  does  not  apply  to  cases 
of  mere  negligence  or  carelessness.  Such  a  shareholder 
should  be  stirred  up  to  a  sense  of  his  duty  by  a  prompt 
fine.  But  delinquencies  on  account  of  carelessness  are 
not  likely  to  be  continued  for  any  great  period  of  time, 
as  a  month  or  three  months.  When  a  shareholder  con- 
tinues delinquent  for  such  a  period  there  should  be  an 
inquiry  into  the  circumstances  and  a  just  disposition  of 
the  matter  made. 

In  drafting  the  rules  of  an  association  too  much  care 
cannot  be  exercised  in  order  that  they  may  be  not  only 
legal  but  equitable.  The  constitution  and  by-laws  should 
be  so  explicit  and  unequivocal  that  every  member  may 
understand  the  obligations  he  takes  upon  himself  and  the 
penalties  to  which  he  lays  himself  liable  when  he  becomes 
a  stockholder. 

Directors  should  also  have  the  right  to  demand  and 
enforce  the  resignation  of  a  member  for  any  gross 
impropriety  of  conduct  which  would  make  his  further 
connection  with  the  association  unwise  or  undesirable. 

Rights   of  Tdembers. 

Members  may  occupy  tiiree  relations  toward  an  asso- 
ciation. Certain  rights  are  vested  in  them  as  members 
of  the  corporation,  or  corporators.  When  a  meinber  is 
only  an  investor  in  the  association,  he  is  posses.sed  of 
certain  special  rights;  and  in  like  manner  if  a  member 
becomes  a  borrower  he  secures  certain  other  special 
rights. 

[163] 


CHAPTER  XII. 

Corporate  Rights   of  Members. 

Every  stockholder  has  the  right  to  attend  ail  the  cor- 
porate meetings  of  the  association,  whether  they  be  the 
regular  annual  or  semi-annual  meetings,  or  special  meet- 
ings called  for  some  particular  purpose.  He  has  the  right 
to  be  duly  notified  of  the  time  and  place  of  all  meetings 
and  to  take  part  in  their  proceedings. 

In  some  States  and  in  some  associations  a  member 
has  but  one  vote  whatever  number  of  shares  he  may 
hold.  In  other  associations  he  has  one  vote  for  each 
share  he  holds.  In  still  others,  in  the  election  of  officers 
he  casts  one  vote  for  each  share  he  holds,  while  on  mat- 
ters of  general  business  he  has  but  one  vote.  In  Ohio 
the  law  now  provides  that  a  member  can  hold  as  many 
shares  as  he  desires,  but  may  not  vote  more  than  twenty. 
These  qualifications  should  be  clearly  and  definitely 
stated  in  the  constitution.  The  constitution  should  also 
declare  plainly  for  or  against  the  right  of  a  member  to 
be  represented  and  to  vote  by  proxy,  and  if  the  right 
is  allowed,  should  define  the  mode  in  which  it  shall 
be  exercised.  In  some  states  this  matter  is  determined 
by  the  statutes. 

A  member  has  the  right  to  have  access  to  the  books 
of  the  association  at  such  times  and  to  such  extent  as 
will  not  interfere  with  the  business  of  the  association 
and  the  work  of  its  officers.  Owing  to  the  inconvenience, 
confusion  and  annoyance  which  may  arise  from  a  large 
number  of  members  having  frequent  access  to  the  books 
in  their  efforts  to  examine  them  intelligently,  it  is  well 
for  members  to  forego  this  privilege  as  far  as  possible, 
and  to  refer  all  matters  requiring  examination  to  the 
auditing  committee,  or  other  authority  empowered  to 
examine  into  and  to  report  upon  the  business  of  the  as- 
sociation. 

11641 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

A  member  has  the  right  to  hold  office  if  elected  or  ap- 
pointed in  the  prescribed  form.  A  member  may  bring 
suit  against  an  association  upon  the  same  conditions 
upon  which  a  person  not  a  member  could  bring  suit. 
A  member  may,  in  behalf  of  himself  and  his  fellow- 
members,  institute  legal  proceedings  against  unfaithful 
officers  to  compel  lawful  action  on  their  part  or  to  re- 
strain them  from  unlawful  action.  This  right  should, 
of  course,  never  be  used  except  when  such  action  is 
based  upon  the  most  convincing  evidence.  Under  cer- 
tain circumstances  a  member  may  bring  action  in  court 
to  have  an  association  dissolved.  At  the  termination 
of  an  association  each  member  has  the  right  to  his 
equitable  share  of  the  profits. 

Rights  as  Investors. 

A  person  who  invests  his  money  in  the  stock  of  a 
building  association  has  a  right  to  share  in  the  profits 
of  the  undertaking  in  such  way  as  is  provided  by  the 
statutes  and  the  rules  under  which  it  operates.  He  also 
has  the  right  to  withdraw  his  funds  and  membership 
at  such  times  as  suit  his  convenience.  But  the  chief  and 
most  important  privilege  of  a  shareholder  or  investor 
is  that  of  receiving  loans  or  advances  from  the  associa- 
tion. It  is  this  privilege  which  makes  membership  in  an 
association  attractive  and  popular  among  that  class  of 
per.sons  for  whose  benefit  building  associations  are  or- 
ganized and  fostered  by  appropriate  legislation. 

Dividends. 

The  statutes,  as  a  rule,  authorize  associations  to  de- 
clare and  pay  dividends  out  of  the  profits  of  their  busi- 
ness, annually  or  otherwise.  These  profits  are  calculated 
at  the  termination  of  each  fiscal  year  or  half-year,  and  in 
some  associations  f|uarterly.     The  jjrofits,  when  declared, 

[IG.'i] 


CHAPTER  XII. 

are  distributed  among  the  members  pro  rata,  according  to 
the  amount  standing  to  the  credit  of  each  member  at 
the  beginning  of  the  term,  and  to  the  amount  each  has 
paid  in  during  the  term,  and  to  the  length  of  time  it  has 
been  in.  The  rules  and  practice  in  reference  to  divi- 
dends vary  in  different  associations.  On  this  account  it 
is  not  possible  to  lay  down  general  rules  governing  this 
matter. 

The  rules  of  every  association  should  be  explicit  in 
reference  to  the  matter  of  dividends,  for  profit-sharing 
is  one  of  the  main  features  which  recommend  associa- 
tions to  popular  favor.  This  rule  must  be  so  drawn 
that  each  member  shall  share  equitably  in  the  profits.  In 
the  organization  of  a  new  association  the  plan  upon 
which  it  shall  operate  in  reference  to  dividends  should 
be  carefully  considered,  for  this  may  have  much  to  do 
with  its  prosperity  and  success. 

Right  of  Withdrawal. 

A  member  who  is  simply  an  investor  and  not  a  bor- 
rower has  the  right  to  withdraw  from  an  association 
without  being  subject  to  a  forfeiture  of  the  money  al- 
ready paid  in.  For  the  protection  of  the  business  of  the 
association  this  right  must  be  exercised  under  proper 
restrictions.  The  rules  of  every  association  should  pre- 
scribe in  detail  the  method  of  withdrawal.  Usually,  a 
member  is  required  to  give  formal  notice  in  writing  to 
the  secretary  of  his  intention  to  withdraw.  This  notice 
should  be  entered  in  a  book  kept  for  this  purpose,  and 
the  attention  of  the  directors  should  immediately  be  called 
to  it.  In  Massachusetts,  associations  are  compelled  by 
statute  to  keep  a  book  for  the  special  purpose  of  record- 
ing notices  of  withdrawal,  which  is  called  the  "With- 
drawal Book."    Members  desiring  to  withdraw  enter  their 

[166] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

notices  in  this  book  in  regular  order,  including  the  date 
of  entry.  The  applications  for  withdrawal  are  then  acted 
upon  in  regular  order. 

While  the  primary  idea  of  the  building  and  loan 
association,  as  already  stated  and  popularly  understood, 
is  to  enable  members  to  become  owners  of  homes,  yet 
it  is  not  the  province  of  an  association  to  inquire  into 
the  purpose  for  which  a  member  desires  to  accumulate 
money.  A  member  may  therefore  use  an  association  not 
only  for  the  purpose  of  securing  a  home,  but  as  he  would 
a  savings  bank  for  a  variety  of  purposes.  He  may  de- 
sire, ( I )  to  accumulate  a  fund  for  the  purpose  of  em- 
barking in  some  business  enterprise,  or,  (2)  for  the 
purpose  of  meeting  some  approaching  obligation,  or,  (3) 
simply  of  securing  a  safe  depositary  for  his  funds,  or,  (4) 
of  securing  a  good  rate  of  interest  on  his  funds  while 
deposited.  It  would  defeat  the  purposes  of  some  of  the 
members  if  there  were  no  proper  provisions  made  for 
the  withdrawal  of  their  money  and  membership  at  such 
times  as  suit  their  plans  and  convenience.  Hence  it  is 
that  provision  for  withdrawals  must  be  made  in  the 
rules  of  associations. 

The  question  has  been  debated  as  to  what  share  in 
the  profits  of  an  association  a  withdrawing  member  is 
entitled.  It  has  been  held  in  some  cases  by  the  courts 
that  a  withdrawing  member  does  not  possess  the  right 
to  claim  a  share  of  the  undeclared  profits  of  an  associa- 
tion. Such  member  receives  the  amount  he  has  paid  in 
and  his  share  of  the  profits  credited  and  undrawn  at  the 
time  of  the  last  preceding  declaration  of  dividends,  after 
there  has  been  deducted  from  this  total  amount  any  fines 
or  other  charges  still  owing  by  them.  If  the  association 
has  suffered  a  loss,  it  is  the  rule  to  deduct  from  the 
amount  which  a  withdrawing  member  has  paid  in,  an 
equitable  portion  as  the  directors  may  deem  necessary  for 

[1671 


CHAPTER  XII. 

the  protection  of  the  remaining  shareholders.  In  the  case 
of  a  prospective  loss,  the  settlement  of  which  may  be  in 
the  hands  of  an  arbitrator  or  receiver,  or  may  be  pending 
in  court,  it  is  usual  to  withhold  some  portion  of  a  with- 
drawing' member's  money  until  adjudication,  when  he 
is  entitled  to  receive  any  and  all  residues  of  such  money 
withheld,  which  equitably  belong  to  him. 

A  member's  privileges  in  the  association  cease  as  soon 
as  he  gives  notice  in  proper  form  of  his  intention  to 
withdraw.  After  that  time  he  cannot  transfer  his  stock. 
A  withdrawing  member  is  a  creditor  of  the  association 
until  his  money  is  paid  him.  As  such  he  may  bring 
action  to  collect  the  amount  due  if  the  association  does 
not  pay  him  in  his  turn  and  when  the  money  is  in  the 
treasury. 

The  rules  of  an  association  should  confer  some  discre- 
tionary power  upon  the  directors  in  reference  to  with- 
drawals to  be  exercised  in  certain  classes  of  cases. 

Inheritance  Tax  Laws. 

In  recent  years  many  of  the  States  have  enacted  laws 
levying  tax  on  inheritances.  In  some  States  these  laws 
require  that  financial  institutions  having  charge  of  funds, 
investments,  securities  or  other  property  of  a  deceased 
person,  shall  not  pay  out  or  disburse  any  of  these  pos- 
sessions except  under  orders  or  by  permission  of  certain 
public  officials.  There  is  such  a  wide  difference  in  the 
provisions  of  the  different  States  regarding  these  mat- 
ters that  it  is  not  advisable  to  attempt  any  analysis  or 
description  of  them  in  this  work.  It  is  proper  to  say, 
however,  that  officers  of  building  associations  should 
familiarize  themselves  with  the  statute  provisions  re- 
garding  this    feature   in    the   State  in   which   they   are 

[1681 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

operating-.  In  handling  and  disposing  of  funds  or  prop- 
erty belonging  to  decedents  and  referred  to  the  asso- 
ciation as  executor,  legal  advice  should  be  sought  as  to 
the  proper  procedure. 

Rights  of  Borrowers. 

As  already  explained  the  primary  purpose  of  a  build- 
ing and  loan  association  is  to  lend  money  to  its  members. 
It  follows,  therefore,  that  every  member  of  an  associa- 
tion who  complies  with  its  rules  has  a  right  to  become 
a  borrower  from  it.  The  amount  of  money  which  a  mem- 
ber is  entitled  to  borrow  is  usually  regulated  by  the  con- 
stitution of  the  association. 

A  member  who  is  a  borrower  from  an  association,  even 
though  in  addition  to  other  security  he  pledges  his  stock 
as  security  for  the  loan,  continues  a  member  in  every 
sense  and  must  discharge  all  the  duties  and  may  enjoy  all 
the  rights  and  privileges  of  his  original  membership, 
except  the  right  of  withdrawal  and  such  other  rights 
as  may  be  abridged  by  the  special  provisions  in  the  con- 
tract for  the  loan. 

A  borrower  has  the  right  at  such  times  as  are  stated 
in  the  rules  to  return  to  the  association,  in  the  aggregate, 
the  sum  of  money  for  the  payment  of  which  in  install- 
ments his  obligation  calls.  This  must,  of  course,  include 
accrued  interest  and  f)ther  lawful  charges.  He  can  in 
this  way,  by  complying  with  the  constitutional  pro- 
visions and  restrictions  governing  such  matters,  release 
his  stock,  or  redeem  property  which  he  may  have  mort- 
gaged to  the  association.  After  such  repayment  the 
stockholder  continues  his  membership  upon  the  original 
conditions  and  may  now  exercise  the  right  of  with- 
drawal. 

11091 


CHAPTER  XII. 

The  exact  amount  of  money  to  be  paid  by  a  borrower 
in  the  ag^gregate  to  discharge  his  obHgation  must  be 
determined  by  the  rules,  and  settlement  should  be  made 
from  the  books  of  the  association.  This  is  another 
matter  which  should  be  carefully  guarded  and  provided 
for  in  the  rules  and  the  contracts,  since  it  has  been  a 
prolific  cause  of  litigation. 

The  executor  or  administrator  of  the  estate  of  a  de- 
ceased member  may  continue  the  membership  if  he  com- 
plies with  the  necessary  conditions  and  regulations.  But 
if  he  does  not  find  it  possible  or  desirable  to  do  this, 
it  has  been  held  that  the  estate  is  entitled  to  the  same 
privileges  and  allowances  as  if  the  borrower  had  volun- 
tarily paid  off  the  loan. 

A  borrowing  member  who  does  not  keep  up  his  pay- 
ments is  not  entitled  to  the  benefits  received  by  those  who 
meet  their  obligations.  His  only  offset  against  the  claims 
of  the  association  is  the  actual  payments  he  has  already 
made  in  the  way  of  regular  dues  and  of  interest  upon  his 
loans.  Such  members  are  also  liable  for  their  proportion- 
ate share  of  the  expenses  and  losses  of  the  association.  A 
borrowing  member,  when  sued  by  the  association,  does 
not  forfeit  his  rights  of  membership,  and  is  still  liable  for 
his  regular  dues. 

An  association  must,  even  after  suit  is  brought,  accept 
the  payment  of  a  loan  with  accrued  interest  and  costs  and 
other  lawful  charges  if  tendered.  Such  offer  is  regarded 
as  a  legal  tender.  If  the  offer  is  rejected  the  borrower 
is  entitled  to  cease  paying  interest  upon  his  debt  and  to 
the  remedy  of  an  adjudication  by  court. 

Duties  of  Borrowers. 

The  duties  of  a  borrower  are  sufficiently  indicated  in 
the  preceding  sections.     He  must  not  only  keep  up  his 

[170] 


DUTIES  AND  RIGHTS  OF  MEMBERS. 

original  obligations  as  a  member  but  must  meet  his  con- 
tracts for  the  payment  of  premiums  and  interest  and 
must  look  after  the  character  and  sufficiency  of  his 
security.  Not  only  is  his  own  welfare  and  good  name 
dependent  upon  his  faithfulness,  but  the  prosperity  of 
the  association  and  the  interests  of  his  fellow-members 
are  involved  also  in  his  obligation.  All  of  these  things 
put  a  heavy  responsibility  upon  the  borrower,  which  by 
every  honorable  consideration  he  must  faithfully  dis- 
charge. 


171 


CHAPTER  XIII. 

Loans  and  Securities. 

Premiums. 

A  premium  is  a  bonus  which  a  borrowing  member 
agrees  to  pay  for  the  privilege  of  having  money  advanced 
to  him.  It  is,  in  effect,  the  difference  between  the  par 
value  of  his  stock  and  the  actual  amount  advanced  to 
him.  It  represents  the  amount  he  is  willing  to  sacrifice 
in  order  to  anticipate  the  ultimate  value  of  his  stock 
by  obtaining  the  immediate  use  of  the  money  which 
the  stock  will  be  worth  to  him  at  its  accumulated  value. 

The  meaning  of  the  term,  premium,  may  perhaps  be 
better  understood  if  the  process  in  the  sale  of  money  is  re- 
versed. Let  us  suppose  that  when  an  association  has 
accumulated  a  sum  of  money  which  is  to  be  loaned  to 
members,  instead  of  the  announcement  of  a  sale  of  money 
to  the  highest  bidder,  the  announcement  be  that  the  asso- 
ciation will  purchase  shares  of  members  at  the  lowest 
offer.  A  member  has,  say,  five  shares,  which  will  be 
worth  at  maturity  $500  each,  or  a  total  of  $2,500.  On 
these  shares  he  has  agreed  to  pay  his  regular  weekly 
installments  until  they  are  paid  up.  He  now  offers  to 
sell  the  prospective  value  of  these  shares  to  the  associa- 
tion for  a  certain  net  sum  of  money,  the  shares  to  be 
assigned  to  the  association  immediately  and  a  note  or 
bond  be  given  for  the  continued  regular  payment  of  the 
weekly  dues,  this  obligation  to  be  secured  by  a  mort- 
gage on  the  real  estate  purchased  with  the  money  ad- 
vanced, or  on  other  real  estate,  or  by  some  other  satis- 

[172] 


LOANS  AND  SECURITIES. 

factory  security.  The  difference  between  the  par  value 
of  the  member's  stock  at  the  maturity  and  the  net  amount 
he  receives  for  it  when  thus  sold  to  the  association  again 
represents  the  premium  which  he  pays  for  the  immediate 
use  of  the  money  thus  secured. 

It  has  been  held  by  the  courts  that  boards  of  directors 
cannot  establish  fixed  rates  of  premium.  In  some  states 
the  law  specifically  authorizes  them  to  do  so. 

The  custom  of  charging  premiums  for  loans  is  fast 
disappearing  in  the  administration  of  the  associations  of 
the  United  States.  This  is  in  line  with  the  objects  of  the 
work  of  these  co-operative  institutions — to  furnish  money 
to  the  borrowers  at  as  low  a  rate  of  interest  as  is  con- 
sistent with  their  own  welfare. 

Nature  of  a  Loan. 

The  loaning  or  advancement  of  money  to  members  is 
one  of  the  peculiar  and  distinguishing  functions  of  build- 
ing and  loan  associations.  This  advancement  of  loans 
can  be  made  to  members,  and  the  by-laws  should  so 
fully  describe  the  methods  of  procedure  that  mistakes  may 
be  avoided. 

In  making  or  carrying  into  effect  the  rules  relating 
to  the  loaning  of  money  to  stockholders,  it  should  be 
borne  in  mind  that  the  borrower  continues  an  active 
member  of  the  association  and,  as  a  partner  in  its  affairs, 
is  interested  in  the  enforcement  of  the  contract  against 
himself  as  a  borrower,  and,  that,  in  a  contract  between 
an  association  and  a  borrowing  member,  whatever  goes 
outside  of  the  statutory  and  constitutional  provisions  is 
invalid. 

Mortgages. 

The  ordinary  security  given  by  a  nieml)er  for  loans 
and  advancements  made  to  him  is  in  the  form  o{  a  n>ort- 

[17.1] 


CHAPTER  XIII. 

g^ge,  or  in  some  States  a  trust  deed,  upon  real  or 
leasehold  estate  which  he  already  holds  or  which  he 
purchases  with  the  money  advanced  to  him.  The  taking 
of  these  mortgages  is  one  of  the  most  common  incidents 
in  the  work  of  an  association  in  fulfilling  the  functions 
for  which  it  is  established.  A  member  may  give  a  mort- 
gage upon  freehold  or  leasehold  property  for  which  he 
can  show  a  clear  legal  title.  He  may  give  a  mortgage 
upon  the  real  estate  of  another  person  who  in  due  form 
submits  his  property  for  this  purpose. 

Mortgages  must  be  drawn  directly  in  accordance 
with  the  statutes  under  which  an  association  operates 
and  with  its  own  constitution  and  rules.  Since  the  sta- 
tutes under  which  associations  are  established  differ  in 
the  several  States,  and  since  constitutions  and  rules  gov- 
erning this  matter  vary  in  different  associations,  there 
are  many  forms  of  mortgages  in  use.  To  enter  into  a  full 
discussion  of  these  forms  would  be  foreign  to  the  purpose 
of  this  work.  Two  forms  in  common  use  are  printed 
in  another  part  of  this  book,*  an  examination  of  which 
will  assist  in  arranging  for  this  feature  of  the  work 
of  an  association.  It  is  sufficient  to  insist  here  that  the 
rules  be  so  carefully  drawn  in  reference  to  this  subject 
that  mistakes  will  not  be  possible.  The  mortgage  itself 
should  contain  the  terms  and  conditions  upon  which  it 
shall  be  foreclosed,  and  should  s^jecify  the  disposition  to 
be  made  of  the  funds  realized  from  the  sale  of  the 
property.  In  case  of  foreclosure,  where  the  sum  realized 
is  insufficient  to  liquidate  the  entire  amount  of  the  debt, 
the  member  is  still  liable  for  the  balance. 

Other  Securities. 

Money  may  be  advanced  to  members  upon  national, 
state,  county,  or  city  bonds  as  collateral  security,  when 

•  S«e  Chapter  on  Forma. 

[174  J 


LOANS  AND  SECURITIES. 

such  action  is  authorized  by  the  statutes  and  the  rules. 
The  acceptance  of  such  collateral  security  is  in  the  dis- 
cretion of  the  directors.  The  borrower  must  g^ive  his 
note  for  the  amount  received  and  the  interest  to  be  paid 
thereon,  and  transfer  his  stock  to  the  association.  The 
note  should  give  the  name,  number,  amount,  and  par  value 
of  the  bond  or  bonds  given  as  collateral  security,  and 
should  name  the  conditions  upon  which  the  security 
becomes  forfeited  to  the  association.  Forfeitures  usually 
become  operative  if  the  borrower  shall  fail  to  pay  up 
his  regular  dues  and  the  interest  for  a  certain  term,  say 
three  months,  at  most  not  longer  than  six  months.  The 
directors  may,  after  notifying  him,  declare  his  security 
forfeited  and  may  proceed  to  dispose  of  fhe  bonds  in 
the  most  profitable  manner  for  the  purpose  of  liquidating 
his  obligation.  The  borrower  may  be  allowed  to  renew 
his  note  from  time  to  time  at  the  discretion  of  the  di- 
rectors. 

Assignment  of  Stock, 

When  a  member's  stock  is  assigned  to  an  association 
as  collateral  security  for  a  loan  the  assignment  is  usually 
required  to  be  made  in  absolute  form.  But  nevertheless 
the  association  cannot  use  or  dispose  of  the  stock  except 
for  the  purpose  for  which  the  assignment  is  made.  The 
stock  is  to  be  held  by  the  association  until  it  is  paid  up  by 
the  member.  The  as.sociation  then  cancels  the  stock  and 
returns  the  bond  to  the  member. 

But  if  the  member  fails  to  keep  up  his  payments  on 
the  assigned  stock,  the  association  may  declare  the  stock 
forfeited,  and  apply  what  he  has  already  paid  in  toward 
the  liquidation  of  his  debt,  and  may  transfer  the  .shares 
to  some  new  applicant  or  applicants  for  membership.  In 
case  of  (leliii(|iicncy  on  the  part  of  tlie  borrower  who 
has  assigned   his  stock   to   the  a.ssociation   as  collateral 

117.51 


CHAPTER  XUl. 

security,  the  association  first  avails  itself  of  the  amount 
he  has  paid  in  on  the  stock,  and  then  proceeds  in  an 
effort  to  realize  the  l)alance  of  his  debt  from  the  sale 
of  his  mortg-aged  property  and  any  bonds  or  other  col- 
lateral security  he  may  have  furnished. 

Sale   of  Securities;  Disposition   of  Proceeds, 

Directors  of  associations  are  bound  to  dispose  of  prop- 
erty on  foreclosure  of  niortg"ages  or  of  forfeited  securities 
on  the  most  advantageous  terms.  This  is  necessary  both 
for  the  protection  of  the  association  and  in  justice  to  the 
delinquent  borrower.  The  proceeds  derived  from  the  sale 
of  securities  must  be  applied  as  follows :  ( i )  To  payment 
of  dues ;  ( 2 )  to  payment  of  interest ;  ( 3 )  to  payment  of 
premiums;  (4)  to  payment  of  fines;  and  (5)  to  payment 
of  costs.  If  any  balance  remains  it  must  be  paid  over  to 
the  owner  and  his  receipt  taken  in  full.  The  rules  should 
be  explicit  in  reference  to  the  forfeiture  and  sale  of  secu- 
rities, for  this  step  involves  the  highest  interests  of  an 
association  and  of  its  meml^ers. 

Loans  and  Securities:  A-^lication  for  Loan. 

A  member  desiring  a  loan  from  a  building  association 
should  be  required  to  fill  out  and  sign  a  formal  applica- 
tion on  a  printed  form  supplied  by  the  association.  This 
application  should  contain  such  data  and  information  as 
will  give  the  officers  of  the  association  full  and  accurate 
information  regarding  the  borrower  and  the  property 
offered  as  security.  It  should  give  the  full  name  of  the 
applicant;  his  address  where  mail  will  reach  him;  the 
fact  whether  he  is  married  or  not,  and  if  married,  the 
full  name  of  wife  or  husband;  the  amount  of  the  loan 
desired,  and  the  use  to  which  the  borrowed  money  is  to 

tl761 


LOANS  AND  SECURITIES. 

be  applied,  whether  for  buying,  building,  repairing  the 
mortgaged  property,  discharging  existing  liens  and  debts, 
or  for  other  purposes. 

The  application  should  contain  also  a  full  and  accurate 
description  of  the  property  offered  as  security,  which 
description  may  be  copied  into  the  mortgage  or  deed  of 
trust,  given  to  secure  the  loan.  This  description  should 
be  quite  full.  Where  the  property  consists  of  a  town 
or  city  lot  it  should  give  the  number  of  the  lot,  the  block, 
subdivision  and  ward  in  which  it  is  located,  the  street 
on  which  it  fronts  and  between  what  streets  it  is  located ; 
whether  the  street  is  improved  by  paving,  sewerage,  side- 
walks, water,  gas  and  electric  light.  The  dimensions  of 
the  lot  in  front  feet  and  in  depth  must  be  stated  together 
with  a  full  description  of  the  character  of  the  building  and 
improvements  thereon.  Information  must  be  given  in  the 
blank  regarding  the  size  of  the  building,  the  material  of 
which  it  is  built,  and  the  purpose  for  which  it  is  being 
used  (whether  for  residence  or  business  purposes)  ;  the 
number  of  stories  in  the  building  and  the  number  of 
rooms  on  each  floor ;  whether  or  not  it  has  a  basement. 
The  application  should  show,  further,  whether  the  house 
is  piped  for  gas  and  wired  for  electricity,  and  the  number 
of  openings  for  each  ;  whether  the  house  is  provided  with 
water  and  connected  with  the  sewer  system,  and  equipped 
with  bath,  toilet  and  stationary  laundry  tubs,  also  the 
system  of  heating  employed;  whether  by  hot  air  furnace, 
hot  water,  steam  or  stoves.  It  should  show  the  out- 
buildings, if  any,  on  the  lot,  such  as  barn,  garage,  etc; 
the  owner's  valuation  of  the  property  and  its  value  as 
assessed  for  taxation. 

It  should  also  contain  personal  information  in  regard 
to  the  borrower ;  his  age,  occupation ;  where  employed, 
how  long  in  that  employment,  and  the  wages  or  compen- 
sation earned,  or  average  monthly  income,  other  property 

fl77] 


CHAPTER  XIII. 

or  real  estate  which  he  owns,  amount  of  indebtedness  that 
he  is  carrying,  amount  of  fire  or  other  insurance  on  the 
buildings  offered  as  security,  and  amount  of  life  insur- 
ance he  is  carrying. 

The  Necessity  of  a  Plat. 

The  application  should  also  have  a  plat  drawn,  on 
which  the  location  of  the  property  can  be  definitely  indi- 
cated, so  that  from  this  plat  and  the  description  of  the 
property,  the  officers  can  readily  locate  the  premises  on 
the  city  map.  If  the  loan  is  for  building  a  new  house, 
the  plans  and  specifications  should  be  filed.  It  is  quite 
important,  also,  that  this  application  should  affirm  that 
the  statements  and  the  answers  given  to  the  questions 
thereon  are  made  by  the  applicant  for  the  purpose  of 
establishing  his  credit,  and  obtaining  a  loan  from  the 
association,  and  that  the  statements  and  answers  given 
by  the  applicant  are  true.  This  should  be  signed  by  the 
applicant  and  attested  by  the  officer  of  the  association 
who  receives  it. 

There  should  be  a  blank  on  this  application  for  the 
appraisement  committee  or  committee  on  securities,  to 
make  their  report,  after  viewing  the  property  and  also  a 
blank  for  the  report  by  the  attorney  of  the  association 
as  to  the  condition  in  which  he  finds  the  title,  after  ex- 
amining the  abstract  which  the  applicant  furnished. 
These  formal  applications  may  be  made  out  at  any  time 
and  filed  with  the  secretary.  They  are  usually  numbered 
in  consecutive  order,  and  presented  by  the  secretary  to 
the  Board  of  Directors  at  their  next  regular  meeting. 

If  it  appears  from  the  facts  disclosed  by  the  applica- 
tion that  the  loan  would  not  be  desirable  for  any  reason, 
the  Board  may  summarily  reject  the  application.     If  the 

[178] 


LOANS  AND  SECURITIES. 

loan  appears  to  be  one  which  the  association  might  find 
desirable  it  is  referred  to  the  appraising-  committee  or 
committee  on  securities,  with  directions  to  inspect  and 
appraise  the  property  and  report  their  conclusions  there- 
on at  the  next  meeting  of  the  Board  of  Directors. 

A^^aisement  of  Real  Estate. 

More  responsibility  for  the  success  or  failure  of  a  build- 
ing association  rests  upon  the  men  who  appraise  the  real 
estate  offered  for  loans  than  upon  any  other  factor  of 
the  organization.  Indeed,  the  success  of  an  association 
is  almost  wholly  dependent  upon  its  loans  being  made 
upon  adequate  security.  For  this  reason,  the  officers 
whose  duty  it  is  to  appraise  this  security  should  be  chosen 
with  great  care.  The  practice  in  this  regard  is  very 
different  in  this  country  from  that  followed  in  England. 
In  Great  Britain  there  are  real  estate  valuators.  These 
men  form  a  regular  profession,  as  well-defined  as  that 
of  practicing  law  or  medicine,  or  dentistry.  This  feature 
of  professional  life  is  just  beginning  to  be  introduced  in 
this  country,  and  in  a  few  of  the  larger  cities  the  real 
estate  boards  are  more  and  more  availing  themselves  of 
the  services  of  professional  valuators.  In  this  country, 
however,  this  profession  has  not  yet  grown  to  a  position 
where  its  services  are  available  in  very  many  commu- 
nities. As  a  result  of  this  condition,  building  associa- 
tions almost  universally  depend  on  the  judgment  of  a 
committee  of  its  board  of  directors  for  fixing  the  ap- 
praisement and  estimating  the  value  of  property  which  is 
offered  as  security  for  loans.  In  selecting  these  com- 
mittees, the  members  should  be  men  of  intelligence  and 
experience.  They  shcnild  be  familiar  with  property 
values  in  the  community  and  at  least  one  of  the  members 
should  be  a  practical  builder,  with  experience  in  estimat- 
ing the  cost  and  values  of  construction  work. 

1179J 


CHAPTER  XIII. 

ApiM-aising  the  value  of  a  piece  of  property  should  not 
be  a  matter  of  guesswork  but  should  be  based  upon  the 
facts  which  the  condition  of  the  property  presents.  At 
a  recent  meeting  of  the  Ohio  Building  Association 
League,  Mr.  C.  C.  Knox,  of  Youngstown,  Ohio,  who  is 
appraiser  for  one  of  the  most  successful  associations  in 
the  State,  gave  a  description  of  the  plan  he  follows  in 
arriving  at  the  value  of  real  estate.  His  paper  contains 
so  many  practical  ideas  of  real  value  upon  this  subject 
that  we  quote  the  following  paaragraphs : 

"After  the  application  for  a  loan  has  been  made,  I  take  the 
application  blank,  note  the  street  and  number,  look  up  the  lot  num- 
ber on  atlas  before  I  start  out,  draw  a  diagram  showing  how  many 
lots   from  intersecting  corner. 

Upon  reaching  the  house  and  being  permitted  to  enter,  I  start 
in  the  cellar  and  proceed  to  the  attic  and  write  on  pad  the  principal 
parts  of  the  house,  such  as  the  material  in  the  cellar  wall,  heating 
system,  if  the  cellar  is  cemented  or  not,  the  finish,  if  wired  for 
electric  lights,  or  piped  for  gas,  bath  complete  or  plumbing  roughed 
in,  china  closet,  grate  or  mantle  or  brick  fireplace,  number  of  bed 
rooms,  finished  or  floored  attic,  the  kind  of  roof  and  siding,  about 
the  number  of  years  old,  etc.  Later  I  copy  these  on  application  blank, 
also  drawing  diagram  of  the  size  and  height  of  house.  To  obtain 
the  height  I  estimate  from  the  bottom  of  cellar  to  attic  floor  and 
one-half  the  height  from  attic  floor  to  top  of  roof.  If  a  house 
had  18  ft.  studding,  7  ft.  cellar  and  10  ft.  from  attic  floor  to  top  of 
roof,  it  would  be  30  feet  high. 

The  main  point  in  going  through  a  house  is  to  give  it  a  rating, 
as  I  appraise  by  so  many  cents  per  cubic  foot.  For  example,  take 
a  24  ft.  by  28  ft.  by  30  ft.  high,  20,160  cubic  feet,  at  15  cents  per 
cubic  foot  is  $3,000.  I  have  a  card  index  with  the  cubic  feet  of  all 
building  figured  out,  just  the  same  as  your  interest  tables,  and  I 
can  see  at  a  glance  the  number  of  cubic  feet  of  any  size  building. 

A  house  with  all  improvements,  about  ten  years  old,  in  good 
repair,  I  give  about  12!/2C.  rating;  20  years  old,  lie.  per  foot  rating; 
not  in  good  repair,  Tyic.  or  8c.  rating,  etc. 

If  it  is  a  new  house,  and  has  tile  and  cement  block  cellar,  wall 
under  all  of  house,  cellar  floor  cemented,  furnace,  pine-floored  attic, 
slate  roof  and  lap  siding,  a   14c.  per  cubic  foot  rating.     Oak  and 

[180] 


LOANS  AND  SECURITIES. 

pine  finish,  W/ic.  rating;  oak  and  pine  finish  and  hard  wood  floor 
in  two  rooms,  15c.  rating;  grate  and  mantel,  W^c.  rating,  brick 
fireplace  and  book  case,  loj/c.  rating;  finished  attic,  18^c.  rating; 
brick  veneer,  20c.  rating;  tile  roof,  2'2c.  rating;  hot  water,  heat,  25c. 
rating ;  fancy  tile  bath  room  with  shower,  27c.  rating,  etc. 

Most  buildings  run  from  5c.  to  27c.  per  cubic  foot.  Anything 
under  5c.  per  cubic  foot  I  recommend  the  loan  declined. 

Also,  I  size  up  the  neighborhood,  whether  it  is  good,  fair  or 
poor  neighborhood,  and  if  the  houses  are  uniform. 

This  system  eliminates  guess  work.  The  way  most  institutions 
appraise  is  to  have  three  of  their  board  of  directors  look  at  the 
property,  each  make  an  estimate  and  average  up  those  amounts 
and  appraise  accordingly.  I  know  of  one  case  in  a  neighboring 
city  where  this  committee  appraised  a  residence.  They  never  got 
out  of  their  automobile,  reported  to  the  association  that  they  ap- 
praised the  house  at  $3,000.  The  owner  explained  to  the  secretary 
that  there  must  be  some  mistake  as  he  had  a  tile  bathroom  with 
shower  bath,  and  plumbing  fixtures  that  cost  $800,  hot  water  heat, 
costing  $600,  mahogany  finish,  etc.  The  result  was  that  this  same 
committee  re-appraised  the  house,  and  they  went  from  cellar  to  attic, 
and  decided  that  it  was  a  $6,000  house.  The  point  that  I  wish  to 
make  is  that  in  order  to  appraise  any  building  you  must  go  through 
that  building  from  attic  to  basement.  I  also  think  that  our  tax 
appraisers  would  make  a  better  and  fairer  appraisement  if  they 
would  go  through  the  building  and  not  size  it  up  from  the  outside. 

The  next  thing  is  land  value.  In  land  value  there  are  a  number 
of  things  that  should  be  taken  into  consideration ;  last  sale,  improve- 
ments, location  in  reference  to  business  or  residence  districts,  streets, 
street  cars,  schools,  churches,  amount  that  it  is  on  the  tax  duplicate 
for  and  distance  from  center  of  city. 

New  plats  I  start  at  $5  to  $6  per  foot  front,  and  add  $1  per  foot 
front  for  curb,  $1  per  foot  front  for  gutter,  $2  per  front  foot  for 
sidewalks,  $3  per  foot  front  for  sewer,  $1  per  foot  front  for  gas,  $2 
per  foot  front  for  water,  $5  per  foot  front  for  paving,  then  as  the 
street  builds  up  and  is  improved  with  good  houses  and  lawns,  such 
as  are  on  high-class  streets,  I  appraise  at  $25,  $30,  $;i5  or  $40  or  $50 
per  front  foot,  etc. 

My  company  gave  me  a  city  atlas.  I  copied  the  values  taken  from 
the  tax  duplicate  and  mark  in  green  ink  every  square,  then  I  place 
along  side  in  every  square  our  value  in  red  ink,  so  that  the  next 
time  I  have  a  loan  in  that  same  square  I  give  it  the  same  land 
value.     Corner  lots   I  give  a  higher  value  than   in-lots,  by  adding 

[1811 
13 


CHAPTER  XIII. 

20  per  cent  if  lot  is  more  than  one  hundred  feet  deep.  In  case 
something  should  happen  to  me,  my  successor  could  use  this  atlas 
to  good  advantage.  An  appraiser  must  have  confidence  in  himself. 
Be  sure  he  is  right,  then  go  ahead.  He  will  find  that  he  can  always 
learn  something  new  on  every  house  he  appraises.  He  must  also 
keep  up  to  date  with  prices  of  materials  and  labor,  as  at  the  present 
time  they  are  going  up  very  fast.  There  are  some  institutions  that 
get  their  values  exclusively  from  the  selling  price  of  properties 
and  appraise  accordingly.  This,  I  think,  is  an  error,  for  I  know 
of  one  instance  where  there  were  two  houses  exactly  alike,  side  by 
side,  same  size  lot,  one  sold  for  $3,000  and  the  other  for  $2,600.  I 
know  some  instances  where  the  owner  and  purchaser  have  agreed  on 
false  selling  price  in  order  to  get  a  larger  loan ;  also  the  contractor 
and  owner  have  signed  up  a  false  agreement  for  the  same  reason. 
I  recall  one  instance  when  an  agreement  for  a  common  16x28  house 
was  signed  up  by  both  parties  and  witnessed  for  $2,300,  when 
the  house  only  cost  $1,400  to  build. 

In  construction  loans,  when  the  plans  are  given  me  to  esti- 
mate, I  always  note  on  the  application  blanks  the  size  of  building 
and  on  the  first  inspection  I  measure  the  building,  compare  it  with 
the  size  on  the  blank,  and  often  I  have  found  the  house  smaller  than 
the  plans  called  for,  in  which  case  our  board  cuts  down  the  loan. 
The  main  point  in  appraisement  for  a  financial  institution  is  what 
would  be  a  fair,  conservative  and  safe  value  to  loan  money  on  and 
not  what  its  selling  price  is,  although  the  selling  price  should  be 
considered.  The  location  should  be  considered.  I  found  out  from 
the  contractor,  who  was  one  of  our  best  contractors,  that  a  brick 
house  I  appraised  in  a  poor  district  cost  $5,000  to  build,  but  I  ap- 
praised it  at  $4,000,  taking  into  consideration  that  if  it  ever  fell 
into  our  hands  we  could  not  realize  more  than  $4,000,  but  if  that 
same  house  were  built  on  some  of  our  better  streets,  I  would  have 
valued  it  at  $5,000. 

Nor  can  you  always  depend  on  the  contract  price,  as  I  know 
of  $800  difiference  between  the  highest  and  lowest  bidder  of  a  $6,000 
house. 

Another  suggestion  I  would  like  to  make  is  that  the  office  force 
is  familiar  with  the  receipts  or  the  way  the  money  comes  in,  but  are 
not  familiar  with  the  way  it  is  disbursed,  or  paid  out.  I  think  it 
would  be  time  well  spent  if  each  of  the  office  force  would  accompany 
the  appraiser  one  or  two  days  each  year  in  his  trips  and  see  how 
and  where  the  money  is  loaned. 

[182] 


LOANS  AND  SECURITIES. 

We  should  be  exceedingly  careful  if  we  loan  money  outside 
our  county.  I  know  of  one  case  where  a  party  purchased  a  house 
and  lot  for  $2,300  and  obtained  a  loan  of  $2,600  from  an  out-of-town 
association.  I  think  that  a  very  good  and  safe  way  to  appraise  prop- 
erty is  for  the  appraiser  to  value  the  property  as  if  he  were  going 
to  loan  his  own  money,  and  I  dare  say  if  that  was  done  the  value 
would  not  be  very  much  out  of  the  way. 

I  have  been  informed  that  most  all  of  the  insurance  companies, 
architects,  contractors  and  engineers  have  adopted  a  system  similar 
to  this  one  for  estimating." 

Expert  A^^aisers. 

In  many  of  the  large  associations  the  board  of  directors 
find  it  inconvenient  to  investigate  individually  the  prop- 
erty offered  as  security,  and  the  matter  of  investigation 
of  loans  and  all  the  details  in  connection  therewith  are 
referred  to  an  expert  on  the  value  of  real  estate  and 
buildings,  whose  duty  it  is  to  make  a  careful  investiga- 
tion as  to  value,  improvements,  and  physical  risk  of  the 
loan.  This  report,  with  an  affidavit  of  the  expert,  is 
filed  with  the  secretary  of  the  association,  who  thereupon 
brings  the  application  before  the  regular  meeting  of  the 
board,  so  that  they  may  investigate  the  details.  In  some 
cases  the  report  is  referred  to  a  special  committee  on 
loans,  which  meets  at  the  call  of  the  secretary,  and  is 
empowered  to  grant  loans  immediately  to  the  borrower. 
This  action  then  is  brought  before  the  regular  meeting  of 
the  board  and  formally  ratified  in  accordance  with  the 
provisions  of  the  constitution  and  by-laws. 

Mechanics  Liens. 

Since  a  large  ratio  of  the  loans  made  by  building  asso- 
ciations is  for  the  purpose  of  building  new  homes,  the 
subject  of  Mechanics'  Liens  becomes  of  prime  impor- 
tance  in  conducting  these  associations.     A   Mechanic's 

[183J 


CHAPTER  XIII. 

Lien  is  created  by  statute,  and  confers  upon  parties  fur- 
nishings material  or  performing  labor,  in  the  construc- 
tion of  a  building,  the  right  to  obtain  a  lien  against  the 
premises  for  the  value  of  the  material  furnished  or  labor 
done.  These  statutes  usually  j^rovide  that  the  entire  un-  ., 
paid  claim  for  material  furnished  or  labor  done  shall 
attach  as  of  the  date  at  which  the  first  material  was  fur- 
nished, or  labor  done  by  the  party  claiming  the  lien. 
There  is  such  wide  difference  in  the  provisions  of  these 
Mechanics'  Liens  Laws  in  the  different  states,  and  they 
are  subject  to  such  frequent  changes  and  amendments 
in  each  of  the  states,  that  no  attempt  will  be  made  in 
this  work  to  analyze  these  statutes  or  describe  plans  and 
methods  by  which  a  building  association  making  con- 
struction loans  may  protect  themselves  against  these  liens. 
It  is  suggested,  however,  that  the  attorneys  for  building 
associations  should  make  a  careful  study  of  the  Me- 
chanics' Lien  Laws  and  that  great  care  should  always  be 
taken  in  making  construction  loans  to  see  that  the  mort- 
gage of  the  association  is  prior  in  time  and  superior  in 
equity  to  any  lien  which  material  men  or  workmen  em- 
ployed thereon  may  place  upon  the  property. 

Straight  Mortgage  Loans. 

Another  departure  from  the  old  method  of  making 
loans  has  been  that  of  making  so-called  straight  mortgage 
loans  to  persons.  The  application  for  money  is  handled 
in  the  same  manner  as  stated,  but  the  borrower,  instead 
of  repaying  the  amount  in  regular  stated  payments, 
make  a  loan  that  is  for  a  definite  number  of  years,  at 
whatever  amount  is  stipulated  in  the  contract  with  the 
association.  There  is  an  increased  demand  on  the  part 
of  the  public  for  loans  of  this  character. 

[184] 


LOANS  AND  SECURITIES. 

State  Supervision. 

The  early  form  of  building  association  was  more  in 
the  nature  of  a  neighborhood  club,  the  membership  made 
up  of  individuals  all  personally  acquainted. 

As  the  system  developed  and  expanded,  and  especially 
after  the  adoption  of  the  serial  and  later  of  the  permanent 
feature  by  which  its  life  was  extended  and  the  possi- 
bilities for  membership  greatly  enlarged,  the  importance 
of  the  system  began  to  be  more  fully  appreciated  by  the 
general  public.  It  became  a  sort  of  quasi-public  institu- 
tion in  which  practically  every  member  of  the  community 
had  an  opportunity  to  secure  membership.  It  developed 
from  a  neighborhood  club  into  an  important  type  of 
financial  institution.  It  became  popular  and  largely 
patronized  as  a  depository  for  savings. 

When  the  system  had  reached  this  point  of  develop- 
ment it  became  apparent  that  an  institution  of  this  char- 
acter should  be  subject  to  some  sort  of  state  or  govern- 
ment supervision.  It  is  an  established  policy  in  this 
country  that  no  institution  should  be  permitted  to  hold 
itself  out  as  a  repository  for  public  savings  without  being 
to  some  extent  subject  to  supervision  by  state  authority. 
It  should  be  required  to  conform  its  plans  and  methods 
in  established  and  approved  lines,  and  its  treatment  of 
its  members  should  be  fair,  just  and  equitable. 

In  carrying  out  this  policy,  practically  every  state  in 
the  Union  has  enacted  laws  requiring  building  associa- 
tions operating  within  its  borders  to  make  regular  reports 
to  some  state  authority,  in  such  form  and  disclosing  such 
facts  in  relation  to  its  business  and  financial  condition  as 
the  state  authority  may  i)rescribe. 

M(;st  of  these  statutes  also  provide  that  the  state 
authority  to  whom  the  reports  are  made  shall  also  have 

I  la^  I 


CHAPTER  XIII. 

power  to  make  an  inspection  and  examination  of  the 
books  of  the  associations.  In  most  of  the  states  this 
examination  is  made  compulsory. 

This  system  of  state  supervision  and  examination,  of 
course,  involves  some  expense  to  the  state,  and  therefore, 
it  is  generally  provided  that  the  association  shall  pay  a 
stipulated  fee  upon  the  filing  of  its  annual  report.  In 
some  cases  a  charge  for  the  examination  is  made  by  the 
state  authority.  This,  of  course,  places  an  added  burden 
and  involves  additional  expense  to  the  association.  For 
this  reason  when  the  plan  of  state  supervision  and  exam- 
ination was  first  proposed,  it  met  with  some  opposition 
from  the  building  associations.  In  other  states  these 
provisions  for  state  supervision  and  examination  were 
enacted  by  the  legislature  at  the  suggestion  and  upon  the 
request  of  the  building  association  league. 

The  effect  of  this  state  supervision  has  been  very  help- 
ful and  beneficial  to  the  movement.  It  has  resulted  in 
wiping  out  and  abolishing  many  harmful  features  and 
practices  in  which  some  associations  indulged.  In  many 
states  it  has  brought  from  the  supervising  authority 
many  wise  and  helpful  suggestions  as  to  improved  plans 
and  methods  for  simplifying  the  operation,  and  making 
more  accurate  the  system  of  accounting  and  bookkeeping, 
thereby  gradually  standardizing  the  plans  and  methods 
of  building  association  operation. 

Doubtless  the  most  helpful  and  beneficial  result  of  this 
state  supervision  has  been  the  added  prestige  given  to 
the  building  association  movement.  It  has  increased 
public  confidence  in  the  safety  and  stability  of  these 
institutions,  and  has  placed  building  associations  on  a 
distinctly  higher  plane  in  public  estimation. 

In  practically  every  state  the  supervising  authority  and 
the  examiners  and  inspectors  in  their  employ  have  been 
men  of  high  character  and  ability,  and  actuated  by  the 

[186] 


LOANS  AND  SECURITIES. 

most  friendly  motives  toward  the  associations  with  which 
they  were  dealing.  As  a  general  proposition  it  may  be 
said  that  the  result  of  these  state  inspections  has  been 
extremely  helpful  and  stimulating  to  the  building  associa- 
tion movement. 

The  value  which  the  association  derives  from  the 
supervision  and  inspection  by  the  state  far  outweighs  the 
cost  and  expense  which  it  usually  imposes  on  the  associa- 
tion. It  may  be  in  place  to  add  that  the  object  and  pur- 
pose of  requiring  these  fees  and  costs  to  be  paid  by  the 
association  is  to  relieve  the  state  from  the  burden  which 
it  creates.  In  fixing  the  amount  of  fees  and  costs  which 
the  association  should  pay  for  this  purpose,  the  aim 
should  be  not  to  make  it  a  source  of  revenue  to  the  state, 
but  simply  to  cover  the  actual  cost  of  the  state  super- 
vision. In  most  of  the  states  this  idea  has  been  kept  in 
mind,  in  fixing  amounts  of  these  fees  and  costs. 


1187J 


CHAPTER  XIV. 

Corporate  Management. 

The  Corporate  Meeting. 

A  corporate  meeting  is  one  composed  of  the  members 
of  an  association  regularly  assembled.  Meetings  may  be 
general  or  special.  The  members  thus  assembled  in  a 
corporate  meeting  constitute  the  supreme  power  of  the 
association.  But  in  their  action  they  are  nevertheless 
subject  to  restrictions.  If  the  association  is  organized 
and  incorporated  under  general  or  special  laws  of  the 
state,  the  corporate  meeting  must  confine  its  actions 
within  the  limits  laid  down  in  the  charter  and  the  statutes 
under  which  it  acts.  The  corporate  meeting  fixes  its  own 
constitution  and  by-laws  in  accordance  with  statutory 
limitations.  But  after  these  are  once  fixed  it  has  no 
power  to  change  them  except  in  accordance  with  the  rules 
which  it  has  established.  Where  associations  are  not 
organized  and  incorporated  under  special  charters  they 
are,  of  course,  subject  to  the  general  statutes  and  rules  of 
equity  like  other  incorporated  companies. 

The  entire  association  is  bound  by  the  acts  of  a  ma- 
jority of  its  members  when  those  acts  are  legal  and  in 
due  form.  In  the  absence  of  special  provision  in  the  rules 
of  the  association  a  question  may  arise  as  to  what  is 
meant  by  a  majority.  It  has  been  held  that  an  associa- 
tion is  bound  by  the  acts  of  a  majority  of  those  present 
at  a  regular  meeting,  whether  they  constitute  a  majority 
of  the  members  or  not.  It  has  been  held  further  that  a 
majority  does  not  necessarily  constitute  a  majority  of  all 

[188] 


CORPOR.\TE  MANAGEMENT. 

members  present,  but  of  all  the  members  present  and 
voting.  But  it  is  better  that  the  rules  of  the  association 
should  state  definitely  what  proportion  of  the  member- 
ship shall  constitute  a  quorum  for  the  transaction  of 
business.  Then  if  this  number  is  not  present  a  meeting 
can  transact  no  business  except  to  adjourn  to  some  other 
date.  Where  the  statutes  or  the  rules  of  the  association 
do  not  fix  the  quorum  the  rule  is  that  a  majority  of  all 
those  present  and  entitled  to  vote  at  a  duly  called  meeting 
shall  constitute  a  quorum. 

Where  the  statutes  do  not  determine  the  right  of  a 
member  to  be  represented  by  proxy  the  question  should 
be  settled  specifically  in  the  constitution  and  by-laws. 

General  7'leetings. 

The  general  sessions  of  associations  are  those  cor- 
porate meetings  which  occur  at  the  stated  times  fixed  by 
the  constitution  or  by-laws.  The  shareholders  should 
meet  at  least  once  in  six  months,  generally  on  the  first 
meeting  night  in  the  month  following  the  close  of  each 
fiscal  half  year.  The  meetings  are  held  at  the  place  desig- 
nated by  the  board  of  directors.  Each  member  must  be 
advised  of  the  time  and  place  of  the  meeting,  either  by 
individual  notification  by  letter  or  otherwise,  or  by  ad- 
vertisement in  some  paper  of  general  circulation  regularly 
issued  in  the  vicinity.  The  usual  business  of  such  meet- 
ings is  the  election  of  officers  and  the  determining  of  the 
general  policy  and  management  of  the  association.  The 
desires  of  the  members  may  be  expressed  through  the 
election  of  certain  per.sons  to  fill  the  offices  who  are 
pledged  Xo  a  certain  line  of  conduct  in  the  management 
of  the  affairs  of  the  association. 

The  business  of  the  general  or  corporate  meeting 
should  be  conducted  according  to  the  order  of  business 
laid  down  in  the  rules.     The  reports  of  officers  is  a  promi- 


CHAPTER  XIV. 

nent  feature  of  these  meetings.  These  reports,  when 
represented  in  i>roper  form,  give  the  members  a  clear  idea 
of  the  business  of  the  association,  and  enables  them  to 
determine  intelligently  the  ix)licy  for  its  future  manage- 
ment. 

Special  Meetings. 

Provisions  should  be  made  in  the  constitution  and  by- 
laws for  the  calling  of  special  meetings.  These  ought  to 
be  so  drawn  that  the  officers  whose  duty  it  is  to  call  them 
have  no  discretion  in  the  matter,  but  should  be  compelled 
to  act  uix)n  the  request  of  a  certain  number  of  members. 
There  ought  to  be  also  a  rule  that  in  the  calling  of  special 
meetings  all  the  members  must  be  notified  in  proper  man- 
ner, and  that  otherwise  the  proceedings  of  the  meetings 
shall  be  invalid.  Such  provisions  are  necessary  in  order 
to  protect  properly  the  rights  of  members.  In  the  absence 
of  these  rules,  it  has  been  held  under  the  general  laws 
that  each  member  must  have  personal  notice,  that  a  rea- 
sonable time  must  be  given,  and  that  the  call  must  be 
issued  by  authority  competent  to  call  a  meeting.  But  if 
all  persons  entitled  to  vote  unanimously  consent,  no- 
tice of  meetings  may  be  waived  and  the  proceedings  will 
be  valid.  Special  meetings  can  transact  no  other  business 
than  that  named  in  the  call. 

An  adjourned  meeting  may  transact  any  business  that 
may  be  lawfully  transacted  at  the  original  meeting.  The 
acts  of  a  meeting  irregularly  convened  are  not  binding. 

Management  of  Corporate  Meetings. 

A  few  suggestions  in  regard  to  the  management  of 
corporate  meetings  will  not  be  out  of  the  way.  Under 
our  democratic  form  of  civil  government,  citizens, 
through  the  influence  of  our  ordinary  political  methods, 
become  educated  to  the  habit  of  delegating  their  authority 

[190] 


CORPORATE  MANAGEMENT. 

to  others.  The  result  is  that  many  good  citizens  neglect 
and  ignore  their  duty  as  such  and  leave  public  affairs  to 
be  directed  by  others.  This  custom  is  too  often  carried 
into  building  associations  and  other  corporate  bodies. 
This  ought  not  to  be.  Every  member  of  an  association 
should  keep  himself  thoroughly  informed  with  reference 
to  its  business  and  management  at  all  times.  He  should 
not  fail  to  be  present  in  person  at  every  corporate 
meeting. 

At  any  corporate  meeting  it  should  be  the  business  of 
some  one,  usually  the  president  or  the  secretary,  to  make 
a  clear  statement  of  the  purpose  of  the  meeting,  and  to 
present  all  the  facts  in  connection  with  the  work  of  the 
association  which  bear  upon  the  matter  to  be  considered. 
It  is  well,  also,  from  time  to  time  in  such  meetings,  both 
for  officers  and  members,  to  review  the  provisions  of  their 
charter,  that  they  may  be  sure  that  their  operations  are 
all  kept  within  the  proper  legal  and  constitutional  bounds. 
It  is  easy,  when  the  members  and  officers  of  an  associa- 
tion are  careless,  for  its  methods  and  operations  grad- 
ually to  slip  outside  of  the  limits  which  they  were  origin- 
ally intended  to  occupy. 

At  any  regular  corporate  meeting  there  should  always 
be  a  clear,  business-like  statement  of  what  the  associa- 
tion has  accomplished  during  the  i)ast  year,  and  what  is 
expected  to  be  accomplished  during  the  coming  year. 
These  facts  being  before  the  members,  they  are  able  to  de- 
termine whether  the  association  is  accomplishing  the 
work  for  which  it  was  intended.  If  it  is,  well  and  good; 
if  not,  measures  must  be  taken  to  correct  its  mistakes. 

Members  should  also  bear  in  mind  that  no  association 
is  of  any  worth  or  power,  simply  from  the  fact  that  it  is 
an  association.  Its  power  and  efficiency  is  only  the  joint 
power  and  efficiency  of  the  men  and  women  who  compose 
it.     If  they  do  not  attcml  its  meetings,  if  they  neglect  its 

[1911 


CHAPTER  XIV. 

business,  or  go  to  meetings  and  simply  hold  up  their 
hands  and  vote  like  machines,  and  give  no  active  thought 
to  its  business  through  the  whole  course  of  the  year,  they 
are  an  incumbrance,  rather  than  a  help  to  it. 

The  officers  and  directors  should  have  evidence  of  the 
never-lagging  interest  of  the  membership.  This  will  not 
only  put  a  proper  check  upon  them  in  their  management 
of  the  association's  afTairs,  but  it  will  also  spur  them  to 
continued  diligence  and  efficiency.  Any  officer  or  mem- 
ber of  an  association  who  satisfies  himself  with  the  mere 
perfunctory  discharge  of  the  routine  duties  of  his  position 
makes  a  serious  mistake.  His  active  and  intelligent  par- 
ticipation and  interest  in  the  association's  affairs  at  all 
times  are  necessary  to  its  highest  success. 

Officers:  Their  Election  and  General  Powers. 

As  Stated  before  one  of  the  principal  functions  of  the 
corporate  meeting  is  the  election  of  officers.  This  must 
take  place  in  the  manner  and  at  the  time  required  by  the 
constitution  and  by-laws.  If  these  prescribe  no  particular 
form  for  elections,  then  it  has  been  held  that  no  election 
conducted  in  good  faith  will  be  set  aside.  Some  associa- 
tions provide  by  constitutional  rule  that  a  double  or  lar- 
ger number  of  candidates  for  each  office  shall  be  nomi- 
nated, from  whom  the  members  are  to  elect.  But  it  has 
been  held,  in  some  states,  that  a  member  receiving  a 
majority  or  plurality  of  votes,  as  the  case  may  be,  is  duly 
elected  and  entitled  to  hold  the  office,  even  if  his  name  is 
not  on  the  list  of  those  nominated.  When  candidates  are 
properly  nominated,  and  the  election  is  held  in  di^e  form 
and  at  the  proper  time  and  place,  those  candidates  re- 
ceiving a  majority  of  the  votes  cast  are  elected.  This 
is  true  even  though  the  majority  of  the  entire  association 
may  refrain  from  voting,  except  in  case  the  constitution 
makes  a  provision  to  the  contrary. 

[1921 


CORPORATE  MANAGEMENT. 

If  from  any  cause  the  election  is  not  held  at  the  proper 
time  set  in  the  constitution,  the  association  nevertheless 
continues,  and  the  old  officers  are  in  authority  until  their 
successors  shall  be  duly  elected  and  qualified. 

The  casting  of  improper  votes  at  an  election  does  not 
vitiate  it  unless  it  can  be  shown  that  the  result  would 
have  been  different  had  they  not  been  received.  On  the 
other  hand,  if  it  can  be  shown  that  legal  votes  have  been 
rejected  and  their  reception  would  have  changed  the  re- 
sult of  the  election,  the  election  is  vitiated  and  a  new  one 
must  be  held.  Ballots  containing  the  names  of  a  less 
number  of  directors  than  are  provided  for  must  be  re- 
ceived, but  those  containing  a  greater  number  must  be 
rejected.  An  inspector  or  judge  of  an  election  may  also 
be  a  candidate,  unless  forbidden  in  the  by-laws. 

The  acts  of  de  facto  officers  are  binding  upon  a  cor- 
poration, especially  so  far  as  these  acts  affect  third  par- 
ties, even  though  it  may  afterwards  be  decided  that  the 
officers  were  ineligible. 


[193] 


CHAPTER  XV. 

Election  and  Duties  of  Officers. 

Officers  Required. 

The  officers  of  a  building  association  are  the  same  as 
of  any  other  corporation  or  business  body.  They  consist 
usually  of  a  president,  a  vice-president,  a  secretary, 
assistant  secretaries,  a  treasurer,  an  attorney  and  a  board 
of  directors. 

Elections. 

The  constitution  provides  for  the  time,  place,  and  man- 
ner of  elections.  Since  the  officers  are  the  actual  man- 
agers of  the  business  of  the  association  the  provisions  for 
their  election  should  be  so  plain  and  explicit  as  to  leave 
no  room  for  doubtful  or  uncertain  action.  The  officers 
are  to  be  clothed  with  legal  powers.  There  should  be  no 
question  as  to  their  legal  qualifications. 

Attention  has  been  called  already  to  the  necessity,  in 
the  organization  of  an  association,  of  selecting  as  officers 
those  persons  who  by  character,  ability  and  experience 
are  best  qualified  to  serve  in  that  capacity.  The  bearing 
of  the  officers,  their  intelligence,  and  their  business  ability 
and  sagacity,  will  have  much  to  do  with  an  association's 
popularity  and  success.  They  must  be  polite  to  all  the 
members  and  other  persons  visiting  the  headquarters  of 
the  association  or  calling  upon  them  privately;  they  must 
be  ready  to  respond  intelligently  to  all  proper  inquiries 
relating  to  the  business  of  the  association;  they  must 
require  that  all  moneys  in  which  the  association  is  in- 
terested are  properly  and  promptly  accounted  for;  they 

1194] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

must  be  quick  to  seize  upon  every  advantage  that  can  be 
used  to  further  the  interests  of  the  association ;  they  must 
carefully  guard  all  investments  or  loans  of  the  associa- 
tion ;  and  must,  in  general,  be  as  watchful  and  careful  of 
all  matters  pertaining  to  the  association  as  any  successful 
business  man  must  be  of  his  own  interests  and  business. 
Oflficers  by  faithfulness  may  build  up  an  association  and 
make  it  very  strong,  while  by  indifference  and  irregu- 
larity of  proceedings,  they  may  destroy  its  popularity  and 
usefulness,  and  even  its  existence. 

As  the  usual  elections  recur  year  after  year  the  ques- 
tion of  the  re-election  of  certain  persons  to  certain  offices 
will  arise.    There  is  one  rule  which  should  always  prevail 
at  elections,  and  that  is  to  seek  the  greatest  good  for  the 
association.     This  can  be  accomplished  in  two  ways :  by 
the  re-election  of  faithful  and  efficient  officers,  and  by  the 
introduction  of  new  blood,  new  energy,  and  new  influ- 
ences into  the  management.     In  connection  with  the  re- 
election of  officers  it  should  be  borne  in  mind  that  no  one 
member  should  be  overburdened  with  the  work  of  an 
association.     On  the  other  hand  an  association  should 
secure  the  benefit  as  far  as  possible  of  the  knowledge  of 
its   affairs   and   workings   possessed   by   its   experienced 
officers.     A  good  rule  is — other  things  being  equal — to 
re-elect  the  salaried  officers  as  long  as  their  work  is  satis- 
factory and  no  special  reason  arises  for  making  a  change. 
Their  knowledge  of  the  details  of  the  business  is  very 
valuable.     It  is  best  to  re-elect  some  of  the  other  officers, 
especially  directors,  at  each  election.     It  is  only  on  rare 
occasions  where  there  is  to  be  some  radical  change  in 
the  management  of  an  association,  that  an  entirely  new 
board  of  directors  should  be  chosen. 

Where  there  is  no  necessity  for  making  a  change,  it 
is  best  to  re-elect  a  strong  representation  from  the  old 
board.    Indeed,  in  order  to  avoid  sudden  and  unfortunate 

[19:,] 


CHAPTER  XV. 

chano;cs  in  the  lx)arcl  and  to  secure  opportunity  at  the 
same  time  for  desirable  rotation  in  office,  some  associa- 
tions adopt  a  rule  to  the  effect  that  at  the  first  election 
ttne-third  of  the  directors  shall  be  elected  for  a  one-year 
term,  one-third  for  two  years,  and  one-third  for  three 
years.  Then  at  each  subsequent  election  one-third  of  the 
whole  number  of  the  board  is  chosen  for  the  full  three- 
year  term. 

Duties  of  President  and  Vice-President. 

In  general  terms  the  duties  of  the  president  and  the 
vice-president,  as  indeed  of  all  the  officers  of  an  associa- 
tion, are,  in  the  absence  of  special  provisions  and  limita- 
tions, the  same  as  belong  to  similar  officers  in  other  like 
bodies.  Thus,  unless  there  be  special  provisions  to  the 
contrary  in  the  constitution  or  by-laws  of  an  association, 
it  is  the  duty  of  the  president,  or,  in  his  absence,  of  the 
vice-president,  or  of  one  of  the  vice-presidents  (who  act 
in  their  numerical  order),  to  call  meetings  of  the  associa- 
tion, and  to  preside  and  preserve  proper  order  at  the 
same,  to  sign  the  contracts  of  the  association,  to  execute 
other  official  documents,  to  sign  warrants  drawn  upon 
the  treasurer,  to  keep  the  seal  of  the  association,  and,  with 
the  board  of  directors,  to  make  provisional  arrangements 
to  meet  all  the  various  unprovided-for  emergencies  and 
necessities  of  the  business  of  the  association.  The  presi- 
dent appoints  all  committees  for  the  appointment  of 
which  no  other  provision  is  made.  For  the  relief  of  the 
president  and  other  officers  from  uncertainty  and  un- 
necessary and  irksome  responsibility,  the  constitution  and 
by-laws  should  specify  as  fully  and  clearly  as  possible 
the  duties  imposed  upon  each  of  them. 

Duties  of  Secretary. 

The  office  of  secretary  is  in  many  respects  the  most 
important  in  the  association.     He  is  the  custodian  of  its 

I19G1 


ELECTION  AND  DUTIES  OF  OFFICERS. 

business  and  records,  and  the  source  of  information  con- 
cerning its  affairs ;  he  keeps  the  minutes  of  all  the  official 
proceedings  of  the  association  and  its  board  of  directors; 
he  conducts  the  correspondence;  he  keeps  the  financial 
accounts;  and  is,  in  general,  the  agent,  and  to  a  large 
extent,  the  acting  manager  of  the  entire  business  of  the 
association.  He  attests  the  signature  of  the  president  on 
all  the  official  documents. 

He  should  submit  quarterly,  semi-annual,  and  annual 
reports  to  the  association,  as  may  be  required  by  the 
rules.  These  reports  should  always  be  written  out  plain- 
ly, neatly  ruled,  and  should  present  a  full  account  and 
summary  of  the  business  for  the  preceding  term.  They 
should  include  a  complete  balance  sheet,  giving  a  de- 
tailed exhibit  of  the  profit  and  loss  accounts,  and  a  state- 
ment of  all  assets  and  liabilities  of  the  association.  Usually 
the  directors  authorize  the  secretary  to  have  these  reports 
printed  for  distribution  among  the  members.* 

The  secretary  possesses  unusual  powers  and  carries 
heavy  responsibilities.  The  constitution  and  by-laws 
should  give  him  clear  and  specific  instructions  in  regard 
to  his  duties  and  liabilities.  No  mistake  should  be  made 
in  the  selection  of  the  secretary,  and  when  once  chosen  he 
should  have  the  cordial  support  and  co-operation  of  all 
the  shareholders. 

Assistant  Secretaries. 

The  business  of  some  associations  is  so  large,  or  the 
secretary  is  so  occupied  with  other  business,  that  the 
employment  of  assistant  secretaries  is  necessary.  They 
are  usually  employed  by  the  directors.  Their  duties  are 
clerical,  and  they  work  under  the  direction  of  the 
.secretary. 

•  Sec  Chapter  on  Forms. 

1197] 


CHAPTER  XV. 

Duties  of  Treasurer. 

The  treasurer  is  the  custodian  of  the  association's 
funds.  Unlike  the  president  and  secretary,  he  possesses 
no  discretionary  powers.  His  duties  are  entirely  minis- 
terial. He  must  give  his  receipt  for  all  money  placed  in 
iiis  hands,  and  is  responsible  for  all  the  funds  of  the  asso- 
ciation he  thus  holds.  He  may  not  pay  out  any  money 
except  upon  warrants  drawn  in  due  form  in  the  manner 
provided  by  the  rules  of  the  association.  He  must  keep 
correct  accounts  of  all  receipts  and  payments.  He  is  not 
liable  for  the  payment  of  warrants  duly  drawn  by  the 
proper  officers  of  the  association,  even  though  the  money 
is  wrongfully  applied  by  them. 

He  cannot  hold  the  association  responsible  for  money 
which  he  may  advance  for  legitimate  purposes  without  a 
warrant.  As  a  general  rule  the  treasurer  should  not  be 
allowed  to  make  his  own  selection  of  the  bank  or  place 
of  deposit  for  the  funds  of  the  association,  unless  the 
question  is  fixed  by  the  statutes.  If,  however,  the  board 
of  directors  select  the  place  of  deposit,  he  is  not  liable 
for  loss  of  the  association's  funds  by  the  robbery  or  fail- 
ure of  the  bank  which  they  have  selected.  When  the 
treasurer  himself  selects  the  bank  of  deposit  he  is  not 
liable  for  loss  by  robbery  or  failure,  provided  that  he  can 
show  that  his  action  has  been  free  from  fraud  or  negli- 
gence. It  is  becoming  quite  common  for  associations  to 
combine  the  offices  of  secretary  and  treasurer  and  have 
but  one  officer  designated  as  secretary-treasurer.  Where 
the  funds  of  the  association  are  deposited  in  a  bank  and 
withdrawn  and  disbursed  by  check,  the  books  and  records 
of  the  treasurer  are  largely  mere  duplications  of  the 
records  made  by  the  secretary  and  makes  needless  work 
and  unnecessary  complications  of  records. 

[198] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

General  Manager. 

In  the  larger  associations  it  is  now  the  custom  to  select 
what  is  known  as  the  general  manager  of  the  institution. 
This  official  has  under  his  control  the  active  management 
of  the  affairs  of  the  association.  He  is  selected  by  a 
board  of  directors  and  holds  his  office  at  the  pleasure  of 
the  board.  In  some  associations  a  member  of  the  board 
of  directors  is  selected,  and  in  others  some  one  outside 
the  board  of  directors  is  chosen.  All  business  transac- 
tions relating  to  the  affairs  of  the  association  are  care- 
fully kept  on  regular  forms,  and  must  be  submitted  to  the 
board  of  directors  at  its  next  regular  meeting  for 
approval. 

Duties  of  Directors. 

The  board  of  directors  are  the  responsible  managers  of 
the  association.  In  them  is  vested  the  power  to  order 
and  transact  all  business  for  the  association,  and  their 
acts  are  the  acts  of  the  association.  Their  powers  and 
limitations  must  be  defined  by  the  constitution  and  by- 
laws. If  they  fail  of  the  full  discharge  of  their  duties  as 
thus  defined,  they  are  responsible  to  the  members  of  the 
association.  If,  on  the  other  hand,  they  transcend  these 
powers  of  the  association,  they  themselves  become  per- 
sonally liable  to  the  parties  interested. 

It  may  be  said  in  general  terms  that  the  directors  of  an 
association  have  charge  of  the  disposition  of  the  funds, 
the  making  of  loans,  the  acceptance  of  securities,  the 
filling  of  vacancies  in  the  offices,  and  the  providing  of 
proper  compensation  for  services  when  this  is  not  other- 
wi.se  fixed.  They  are  subject  to  the  control  of  the  cor- 
porate meeting,  but  not  of  individual  members.  A  mem- 
ber may,  however,  on  behalf  of  himself  and  others,  pro- 
ceed by  law  against  the  directors  for  illegal  acts. 

[1991 


CHAPTER  XV. 

The  number  of  tiiectiiigs  of  the  board  of  directors  is 
usually  fixed  I)y  the  C(Mistitution,  but  the  time  and  place 
may  l)e  determined  by  the  directors  themselves.  When 
the  association  has  an  oflkc,  or  reg^ular  place  of  business, 
it  is  best  that  the  directors'  meeting  be  held  there.  The 
time  of  the  regular  meetings  of  the  directors  should  be 
fixed  and  made  known  to  the  members  of  the  association. 
The  directors  may  call  special  meetings,  both  of  the  mem- 
bers in  general,  or  of  their  own  body.  All  directors  must 
have  notice  of  such  meetings,  and  acts  of  meetings 
irregularly  called  or  convened  are  invalid,  so  far  as  the 
interests  of  a  third  and  innocent  party  may  suffer.  The 
rules  of  an  association  should  specify  carefully  w^hat  num- 
ber of  directors  shall  constitute  a  quorum  for  the  transac- 
tion of  business.  Except  by  special  provision,  a  director 
cannot  delegate  his  powers  to  another  person ;  but  the 
full  board  may  delegate  some  portion  of  its  work  to  a 
committee  appointed  to  attend  to  it.  They  should  keep 
full  and  accurate  minutes  of  their  transactions. 

A  director,  as  an  individual,  may  make  a  contract  with 
the  association,  provided  he  secures  no  special  advantage 
not  common  to  other  members.  A  director  becomes  per- 
sonally liable  to  the  stockholders  for  losses  when  they  are 
occasioned  by  reason  of  fraud  or  connivance  at  fraud 
upon  the  association.  Directors  are  liable  for  embezzle- 
ment, willful  misconduct,  breach  of  trust,  or  gross  inat- 
tention and  negligence.  They  are  not  liable  for  mistakes 
of  judgment,  provided  they  are  honest  and  within  the 
scope  of  their  powers  and  discretion.  A  director  who  is 
a  party  to  a  fraud  upon  an  association  is  barred  from 
sharing  in  its  benefits. 

Duties  of  Trustees. 

The  duty  of  trustees,  where  such  officers  are  appointed, 
is  to  hold  and  convey  titles  for  the  association  under  the 

[200] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

order  of  the  board  of  directors.  Very  few  associations 
now  have  trustees,  this  being  regarded  as  useless,  un- 
necessary, and  cumbersome.  In  some  states  where  loans 
are  secured  by  deeds  of  trust  instead  of  mortgages,  a 
trustee  is  one  of  the  essential  officers. 

The  Attorney:  His  Appointment,  Unties,  and  Compensation, 

Every  association  must  have  a  duly  authorized  legal 
adviser.  He  should  be  a  regular  officer  of  the  associa- 
tion. He  usually  is  designated  officially  as  attorney, 
though  he  is  sometimes  termed  solicitor,  or  counselor. 
The  manner  of  his  appointment  dififers.  In  some  associa- 
tions he  is  elected  at  the  same  time,  and  in  the  same  man- 
ner, and  for  the  same  term,  as  the  other  officers.  But  more 
frequently — and  this  seems  much  the  better  way — he  is 
selected  and  employed  by  the  board  of  directors.  In 
making  this  appointment  the  directors  cannot  be  too  care- 
ful. His  position  is  one  in  which  he  may  do  great  good 
or  harm  to  the  association.  There  are  emergencies  in 
which  the  welfare  and  even  the  continued  existence  of  the 
association  will  depend  almost  entirely  upon  his  intelli- 
gence, honesty,  and  faithfulness. 

He  should  be  a  man  of  good  standing  in  his  profession. 
He  should  have  a  moderate  independent  practice,  not  so 
much  as  to  absorb  his  time  and  thought  to  the  exclusion 
of  the  care  of  the  afifairs  of  the  association,  nor,  on  the 
other  hand,  so  moderate  as  to  induce  him  to  undertake 
arbitrarily  to  make  business  out  of  the  association.  Many 
an  attorney,  who  has  the  real  interests  of  his  association 
at  heart,  is  the  most  active  and  efficient  agent  in  securing 
desirable  members  in  its  organization,  and  in  so  increas- 
ing its  list  of  shareholders  from  time  to  time  as  to  put 
it  upon  a  permanent  working  basis.  The  attorney  should 
be  a  man  of  such  character  as  will  give  the  directors 
some  degree  of  pride   in   placing   his  name   upon   their 

[201] 


CHAPTER  XV. 

reports  and  documents.  In  Eng-land  the  attorney  must 
be  appointed  and  commissioned  under  the  official  seal 
of  the  society. 

Whatever  may  be  the  method  of  his  appointment  it  is 
the  duty  of  the  attorney  to  act  as  the  legal  adviser  of  the 
association  upon  all  legal  matters  connected  with  its 
business.  He  advises  the  other  officers  and  the  directors 
In  regard  to  their  functions  and  duties  and  the  proper 
disposition  of  the  business  of  the  association.  He  ex- 
amines records  and  titles.  He  prepares  or  passes  upon 
the  forms  and  blanks  to  be  used  by  the  association,  and 
gives  his  advice  in  the  execution  of  all  official  documents. 

The  following  article  from  The  American  Building 
Association  Nezvs,  of  Cincinnati,  written  by  Hiram  M. 
Rulison,  Jr.,  an  attorney  of  much  experience  in  building 
association  matters,  covers  this  whole  subject  so  well  that 
it  is  worth  incorporating  here.     Mr.  Rulison  says: 

"After  the  appraising  committee  has  completed  its  work  in  actually 
inspecting  the  property  as  to  its  value,  it  is  then  that  the  duty  and 
responsibility  of  the  attorney  begins.  It  really  should  begin  before 
even  the  work  of  the  appraising  committee  begins,  by  carefully 
preparing  a  plat  showing  the  exact  location  of  the  property  to  be 
appraised,  so  that  no  mistake  could  possibly  be  made  and  no  excuse 
could  be  offered,  in  case  the  wrong  property  should  by  any  accident 
be  appraised  for  the  loan. 

In  one  or  two  cases  where  gross  frauds  were  attempted  to  be 
perpetrated,  this  was  the  excuse  offered  by  the  appraising  committee; 
that  they  had  appraised  the  wrong  property.  This  could  be  prevented 
in  every  case  by  a  careful  preparation  by  the  attorney  of  a  proper 
plat.  Some  attorneys  think,  in  order  to  retain  their  position  and 
stand  well  with  the  board,  that  all  they  are  called  upon  to  do  is  to 
report  on  the  title  as  they  find  it,  regardless  of  the  actual  value  of 
the  property  or  the  financial  standing  of  the  prospective  borrower. 
No  greater  mistake  could  possibly  be  made. 

An  honorable  attorney  will  report  all  the  facts  as  he  finds  them, 
and  if  he  does  not  do  so  he  is  violating  a  sacred  duty  he  owes  to  the 
hundreds  of  trusting  depositors,  who  are  relying  upon  his  honor 
and  integrity  to  protect  their  hard-earned  savings.   One  of  the  recent 

[202] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

failures  of  a  well-known  association  could  have  been  avoided,  had 
the  attorney  who  examined  the  title  of  the  property  on  which  an 
$8,000  loan  was  granted,  been  honorable  enough  to  inform  the  board 
that  the  property  was  in  a  deep  gully ;  that  it  was  taxed  at  only  a 
few  hundred  dollars,  and  had  only  recently  been  appraised  for  a  loan 
in  another  association  at  only  $1,500. 

A  failure  to  disclose  facts  of  this  kind  is  nothing  but  downright 
dishonesty,  and  would  lead  unsophisticated  people  to  believe  that 
such  an  attorney  was  'interested.'  About  the  same  time,  a  prospective 
loan  of  about  the  same  amount  was  defeated  and  the  association 
saved  by  the  brightness  and  honesty  of  the  attorney,  who  boldly 
reported  all  the  facts  to  the  board  and  insisted  upon  a  full  examina- 
tion of  all  the  facts,  which  disclosed  a  similar  state  of  affairs  as  first 
referred  to.  The  plunderers  were  exposed  and  the  depositors'  money 
saved. 

A  careful  attorney  would  report,  if  the  fact  came  to  his  notice, 
an>-thing  of  an  unfavorable  nature  that  might  be  developed  in  regard 
to  the  prospective  borrower ;  as  for  instance,  that  all  the  other  prop- 
erty which  the  party  owned  was  covered  by  mortgage  to  its  full 
value ;  that  the  limit  was  being  stretched  in  the  present  instance ; 
that  other  loans  had  been  foreclosed ;  that  the  present  loan  was  a 
mere  shifting  around,  'borrowing  from  Peter  to  pay  Paul,'  or  any- 
thing else  that  might  come  to  his  notice.  No  doubt  the  borrower 
would  denounce  such  an  attorney  for  being  a  meddlesome  man,  but 
the  directors  and  depositors  would  bless  him.  The  attorney  should 
always  report  the  tax  valuation  of  all  property  examined ;  for 
although  the  ta.x  value  is  scarcely  ever  a  fair  criterion  to  measure 
values  by,  still  it  is  in  most  cases  a  great  help.  The  officers  of  the 
board  and  the  appraising  committee  may  be  the  most  careful  men  in 
the  world,  and  may  perform  all  their  duties  in  the  most  careful 
manner  possible,  but  it  will  amount  to  nothing  if  the  attorney  is 
derelict  in  his  duties. 

He  cannot  make  too  careful  an  examination.  This  he  some- 
times realizes  when  too  late,  especially  when  he  happens  to  overlook 
a  mortgage,  judgment,  or  a  mechanic's  lien,  and  is  called  upon  to 
make  the  amount  good,  as  sometimes  happens.  If  so  much  care  is 
required  of  an  'honest  attorney'  just  think  how  completely  an  asso- 
ciation is  at  the  mercy  of  a  man  who  is  careless  in  his  habits,  or 
who  chooses  to  be  dishonest  and  to  work  in  collusion  with  a  dis- 
honest borrower ;  he  could  bankrupt  the  association  in  short  order 
more  completely  than  cither  the  secretary  or  the  treasurer.  Only  men 
of  honor,  integrity,  ability,  and  experience,  should  be  entrusted  with 

1203J 


CHAPTER  XV. 

this  great  responsibility.  Not  the  least  of  their  duties  is  that  of 
approving  the  sufliciency  of  the  sureties  on  the  bond  of  officers. 
And  tliis  should  always  be  carefully  attended  to. 

1  have  even  thought  that  an  attorney  should  be  somewhat  familiar 
with  book-keeping,  and  that  he  should  be  willing  to  serve  occasionally 
on  an  auditing  coniniittec  in  order  to  see  that  this  branch  of  the 
business  was  properly  attended  to.  In  other  words  an  attorney 
should  be  one  of  the  best  posted  men  in  all  the  doings  and  workings 
of  an  association,  including  not  only  the  law  but  the  best  methods  of 
management  and  business,  and  should  be  willing  to  assist  in  any  and 
every  way  possible  ;  for  if  any  one  person  more  than  another  receives 
a  benefit  from  the  association,  it  is  the  attorney. 

It  is  true  that  his  compensation  for  the  examination  of  titles  is 
small,  and  if  that  were  all  the  pay  he  received  he  could  hardly  afford 
to  do  the  work  for  the  money.  But  an  obliging  and  accommodating 
attorney  who  will  not  neglect  his  association,  but  will  attend  the 
meetings  with  some  degree  of  regularity  and  be  on  hand  with  a  word 
of  advice  when  most  needed,  and  let  the  people  get  in  the  habit  of 
meeting  him  on  these  occasions  regularly,  will  find  a  steady  flow  of 
business  from  this  source  alone,  which  will  amply  repay  him  for  the 
time  and  labor  expended. 

More  associations  are  organized  by  attorneys  for  the  sake  of 
getting  the  business,  than  by  any  other  class  of  individuals ;  and  yet, 
strange  to  say,  the  attorney  is  usually  the  one  to  be  the  first  to  lag 
behind  when  there  is  any  work  to  be  done,  unless  a  comfortable  fee 
is  in  sight.  I  have  frequently  heard  of  instances  where  the  attorney 
failed  to  attend  the  weekly  meetings  for  months  at  a  time.  These 
attorneys  are  not  enthusiastic  advocates  of  building  associations. 

On  the  other  hand  the  attorney  who  attends  regularly  finds  his 
hands  full  of  business,  keeps  his  association  out  of  useless  litigation 
by  a  little  timely  advice,  and  is  one  of  the  best  friends  of  the 
institution. 

Many  of  the  patrons  and  borrowers  are  working  people  whose 
time  is  not  their  own,  and  it  would  be  a  manifest  hardship  on  them 
to  compel  them  to  lose  a  day  to  dance  attendance  on  an  attorney's 
convenience,  when  with  a  little  effort  on  his  part  he  could  have  the 
necessary  papers  signed  at  the  association  and  thus  oblige  a  client, 
as  well  as  save  him  a  day's  wages. 

I  do  not  say  this  could  always  be  done,  but  sometimes  it  certainly 
can  be,  especially  where  there  are  a  large  number  of  mechanics  who 
are  compelled  to  sign  a  release  of  any  claim  on  a  building  before 
they  can  draw  pay  for  labor  or  materials.    It  would  be  a  hardship  to 

[204] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

compel  six  or  eight  men  to  lose  a  day  to  come  to  a  lawyer's  office 
when  all  the  business  could  be  done  at  the  association  without  loss 
of  time.  .'\  building  association  is  certainly  a  co-operative  institu- 
tion, and  every  one  connected  with  it  should  be  willing  to  do  his  part 
and  his  duty.  On  the  other  hand  directors  and  other  members  should 
not  expect,  (as  is  too  often  the  case)  that  the  attorney  is  bound  to 
attend  to  their  private  business  at  building  association  reduced  rates. 
It  is  true  he  may  be  able  to  cut  rates  on  some  on  the  score  of  friend- 
ship and  old  acquaintance,  and  this  he  imdoubtedly  will  and  does  do, 
but  an  attorney  would  have  to  be  a  person  of  herculean  capacity  for 
work,  to  be  able  to  make  both  ends  meet  and  pay  expyenses,  if  all  his 
work  were  done  at  these  rates.  This,  however,  is  a  fact  that  is  not 
always  taken  into  consideration  by  members,  and  sometimes  is  pro- 
ductive of  hard  feelings,  if  the  attorney  will  not,  or  cannot,  consent 
to  work  for  all  his  friends  at  cut  rates.  The  association,  too, 
frequently  criticises  an  attorney's  bill  for  foreclosing  a  mortgage, 
looking  upon  this  expenditure  as  a  dead  loss,  yet  it  is  one  of  the 
most  important,  and  sometimes  one  of  the  most  difficult  of  an 
attorney's  duties,  and  sufficient  compensation  should  be  allowed  to 
insure  careful  and  correct  work  on  the  part  of  the  attorney. 

All  questions  have  two  sides,  and  while  an  attorney  should  be 
able  and  willing  to  do  his  duty  thoroughly  and  conscientiously,  he 
should  at  the  same  time  receive  such  treatment  from  the  association 
and  its  membership,  as  will  at  least  assure  him  that  they  appreciate 
the  interest  he  may  take  in  their  welfare,  and  that  tliey  believe  that 
the  'laborer  is  worthy  of  his  hire.' " 

If  the  attorney  does  not  receive  a  stated  salary,  the 
directors  should  fix  a  .system  of  fees  to  be  paid  him  for 
the  examination  of  titles  and  other  services.  Some  asso- 
ciations have  a  graded  system  of  fees  for  the  examination 
of  titles.  If  a  member  borrows  one  share,  he  is  taxed  a 
certain  amount  for  the  examination  of  his  title  to  the 
property  he  mortgages.  If  he  borrows  more  than  one 
share,  he  is  taxed  a  proportionate  amount  for  each  addi- 
tional share.  This  rule  is  manifestly  unjust  to  attorneys, 
for  it  requires  as  much  time  and  work  to  make  an  exam- 
ination of  a  title  if  but  a  single  share  is  borrowed  on  it, 
as  if  it  were  .security  for  ten  or  twenty  shares.     Since  the 


CHAPTER  XV. 

examination  of  titles  requires  care  and  involves  respon- 
sibility, an  attorney  should  have  a  good,  reasonable  fee. 

For  instituting  and  defending  suits,  and  any  other 
unusual  legal  business,  special  fees  should  be  fixed  by  the 

directors. 

Bonds  of  Officers. 

It  is  customary  to  require  bonds  from  certain  officers 
of  associations.  Where  the  statutes  give  no  direction  in 
this  matter  it  should  be  fixed  by  the  association  itself  in 
its  constitution  and  by-laws.  The  particular  object  of  a 
bond  is,  to  enforce  responsibility,  especially  with  those 
officers  who  have  the  handling  and  custody  of  the  funds, 
or  of  any  officer  whose  trust  exposes  him  to  temptation 
and  the  association  to  the  possibility  of  loss.  The  by- 
laws or  rules  should  specify  which  officers  shall  give  bond 
and  the  amount  of  bond  required  in  each  case.  The 
approval  of  bonds  usually  rests  with  the  directors.  A 
bondsman  is  liable  only  to  the  extent  of  the  precise  terms 
of  the  bond.  All  officers  who  are  required  to  give  bond 
should  have  them  ready  at  the  first  meeting  after  their 
election  and  hand  them  in  at  that  time.  Bonds  should  be 
carefully  drawn  so  as  to  meet  all  legal  requirements.  Each 
officer  who  is  to  give  bond  should  furnish  at  least  two 
first-class  sureties. 

The  president  should  give  a  bond  of  from  $2,000  to 
$4,000;  the  vice-president,  $2,000  to  $4,000;  the  secre- 
tary, $2,000  to  $5,000;  the  assistant  secretary,  $500  to 
$1,000;  the  treasurer,  $5,000  to  $10,000;  members  of 
appraising  committee,  $1,000  to  $3,000,  each;  the 
attorney,  $5,000  to  $10,000.  Members  of  special  com- 
mittees should  also  in  some  cases  give  bond  with  amounts 
in  proportion  to  the  duties  and  responsibilities  devolving 
upon  them.  Officers  and  directors  of  an  association 
should  not  be  permitted  to  become  bondsmen  for  each 

other. 

[206J 


ELECTION  AND  DUTIES  OF  OFFICERS. 

Surety  Bonds. 

With  the  change  brought  about  by  the  organization  of 
companies  formed  for  the  purpose  of  offering  surety  to 
the  cHents,  the  modern  method  has  been  to  have  the 
officials  of  building  associations  bonded  in  a  responsible 
bonding  or  surety  company.  These  companies  issue  bonds 
covering  the  association's  financial  affairs  from  any  loss 
on  embezzlement  of  any  of  its  officials,  at  a  stated  regular 
annual  premium.  The  expense  for  these  bonds  is  paid 
by  the  association,  and  the  form  of  bonds  issued  by  these 
companies  should  have  careful  investigation  by  the 
attorney  of  the  association  to  see  that  they  are  in  proper 
legal  form. 

In  some  of  the  states  these  bonds  must  be  filed  with 
the  state  officials,  after  they  have  been  secured,  to  keep 
these  bonds  on  file  for  the  inspection  of  the  public  and  for 
their  protection.  In  those  states  where  this  is  not  pro- 
vided for,  the  bonds  of  the  officers  are  usually  kept  in 
custody  by  the  secretary,  who  places  them  with  the  other 
papers  of  the  association,  excepting  that  of  his  own  bond, 
which  is  usually  held  by  the  president  of  the  association. 
In  some  states  the  state  authority  having  supervision  of 
building  associations  is  by  statute  made  the  custodian  of 
all  bonds  given  by  the  officers  of  an  association. 

Responsibilities  of  Officers. 

No  person  should  be  selected  as  an  officer  of  a  build- 
ing association  who  is  from  any  cause  dis(|ualified  for  a 
faithful  discharge  of  the  functions  of  his  office.  Whoever 
accepts  a  position  as  an  officer  should  faithfully  and 
conscientiously  di.scharge  the  duties  imposed  upon  him. 
Hence,  by  agreement  among  the  members  of  an  associa- 
tion, certain  provisions  are  usually  made  in  the  constitu- 
tion or  by-laws  for  the  punishment  of  sikIi  lapses  from 
duty  on  the  part  of  officers  as  are  not  of  a  criminal 
character. 

[2071 


CHAPTER  XV. 

Thus  it  is  often  provided  (hat  tlic  officers  shall  he  sub- 
ject to  fines  for  certain  classes  of  offenses  or  to  removal 
for  certain  other  offenses.  The  rules  may  be  so  drawn  as 
to  apply  to  cases  where  the  offense  is  not  directly  against 
the  interests  of  the  association  or  its  members,  but  may 
simply  affect  the  moral  character  of  the  officer  and  his 
standing  in  the  community,  thus  rendering  him  unpopular 
and  unfit  for  his  position  of  trust  in  the  association. 

An  officer  who  becomes  delinquent  in  his  position  as  a 
member  of  the  association,  may  be  considered  as  unfit  to 
occupy  a  place  as  an  officer.  The  power  of  fixing  penal- 
ties, such  as  fines  or  removal  from  office,  may  be  fixed  in 
the  board  of  directors,  or  may  rest  in  the  association  at 
large.  The  criminal  liability  of  ofificers  of  a  building 
association  is  the  same  as  that  of  officers  of  other  corpora- 
tions or  of  individuals  generally.  No  man,  whatever  his 
position,  is  permitted  to  appropriate  to  his  individual  use 
or  advantage  that  which  is  not  his  own  or  to  which  he 
has  not  obtained  a  legal  right. 

Remuneration  of  Officers. 

What  officers  shall  receive  compensation  is  determined 
by  the  provisions  of  the  constitution  and  by-laws.  It  is 
the  general  custom  to  leave  the  amount  of  compensation 
to  be  paid  to  the  different  ofBcers  to  the  discretion  of  the 
directors  who  fix  the  amount  by  special  contract  with  the 
respective  ofificers.  When  the  salary  is  fixed  by  the  con- 
stitution or  by-laws  the  officer  may  claim  the  full  amount 
upon  the  strength  of  that  record  alone.  If  his  duties 
become  enlarged,  and  the  salary  is  then  inadequate  he 
cannot  claim  additional  compensation.  His  only  remedy 
lies  in  securing  a  change  in  the  rules  or  in  resigning  his 
position. 

12081 


ELECTION  AND  DUTIES  OF  OFFICERS. 

In  cases  where  the  compensation  is  not  fixed  by  the 
constitution  or  by-laws,  and  where  no  express  contract 
has  been  entered  into,  it  rests  in  the  discretion  of  the 
board  of  directors  as  to  whether  any  compensation  shall 
be  allowed  or  not,  and  to  what  amount.  It  should  be 
borne  in  mind  that  a  building  association  is  an  organiza- 
tion for  the  mutual  advantage  of  its  members,  and  the 
fundamental  idea  is  that  each  member  shall  work  for  the 
benefit  of  all.  On  this  account  it  is  expected  that  each 
member  hold  himself  ready  to  contribute  his  personal 
services  within  reasonable  limits.  Therefore,  even  those 
who  are  in  official  position  are  expected  to  render  a  fair 
proportion  of  service  without  remuneration  and  that  they 
are  to  be  compensated  only  when  it  would  be  unjust  to 
them  as  individuals  to  expect  their  services  without 
remuneration. 

A  salaried  officer  cannot  claim  extra  compensation  for 
work  done  in  the  line  of  his  duty.  Officers  must  look 
only  to  the  funds  of  the  association  for  their  remunera- 
tion, and  cannot  recover  the  amount  of  their  salaries  from 
individual  members  or  directors. 

Salary  of  Directors. 

It  has  been  the  almost  universal  custom  that  directors 
should  serve  without  remuneration.  Lately  the  question 
of  allowing  them  pay  for  their  services  is  being  seriously 
considered.  Indeed,  in  some  associations  directors  are 
paid  for  their  services  either  directly  or  indirectly.  Some 
of  the  considerations  urged  in  favor  of  the  payment  of 
directors  may  be  mentioned.  Their  services  are  indispen- 
sable to  the  operations  of  an  association.  It  is  wholly 
impracticable  for  all  the  members  of  an  association  to 
come  together  at  each  meeting  and  attend  to  the  receiving 
of  money  and  all  its  routine  business  operations.  Even  if 
they  could  so  come  together,  it  would  be  impracticable 

[209J 


CHAPTER  XV. 

ior  such  a  body  to  do  such  work.  Many  of  them  do  not 
know  how  to  do  it,  and  so  many  coming  together  they 
would  simply  be  in  one  another's  way.  "What  is  every- 
body's business  is  nobody's  business." 

On  account  of  these  circumstances  associations  are 
compelled  to  delegate  authority  to  certain  selected  mem- 
bers to  attend  to  the  prosecution  of  their  business.  These 
selected  members  are  called  directors.  Because  certain 
stockholders  are  selected  to  serve  in  the  capacity  of  direc- 
tors does  not  make  it  any  more  possible  or  convenient 
for  them  to  attend  the  regular  meetings  to  look  after  the 
business  than  it  would  be  for  any  other  stockholder  not 
so  selected.  They  must  lose  their  time  and  comfort,  and 
thus  interfere  to  a  greater  or  less  extent  with  the  prose- 
cution of  their  own  private  business  and  interests.  Again, 
those  stockholders  selected  to  act  as  directors  are  so 
selected  because  they  have  that  intelligence  and 
knowledge  that  fit  them  to  attend  to  such  business.  Intel- 
ligence, knowledge,  and  experience  are  valuable.  Hence, 
other  things  being  equal,  a  director's  time  is  likely  to  be 
of  even  more  value  than  that  of  the  average  stockholder. 

The  directors  being  charged  with  the  actual  manage- 
ment and  disposition  of  the  business  of  the  association, 
they  must  carry  a  responsibility  unknown  to  the  other 
stockholders.  The  directors  are  the  official  representa- 
tives of  an  association.  As  such  they  must  not  only 
execute  its  routine  business  but  must  represent  it  in  all 
incidental  matters  and  in  emergencies.  They  are  the 
sources  of  information  to  the  stockholders  and  to  out- 
siders. Their  work  on  committees  involves  them  in  many 
duties  outside  of  the  regular  meetings.  They  must  ac- 
count faithfully  for  all  moneys  coming  into  the  posses- 
sion of  the  association ;  they  must  keep  up  the  collections 
and  act  promptly  in  case  of  delinquents;  they  must  make 
deposits  and   investments;   they  must   decide  upon  and 

[210] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

declare  dividends;  they  must  pass  upon  premium  and 
interest  rates;  they  must  accept  or  reject  borrowers  and 
mortgages  and  other  securities;  they  are  compelled  to 
keep  full  records  of  all  their  doings  in  the  minute  and 
account  books.  That  every  matter  shall  have  due  atten- 
tion they  are  compelled  to  bind  themselves  to  a  certain 
order  and  routine  in  what  they  do.  Finally,  they  are 
required  to  keep  their  members  informed  officially  by 
regular  reports  of  all  their  transactions,  and  of  the  con- 
dition of  the  affairs  of  the  association  in  full  detail. 

Many  members  of  the  association,  not  having  had  ex- 
perience as  directors,  and  not  being  close  observers  or 
very  thoughtful  about  the  matter,  do  not  appreciate  the 
amount  and  quality  of  service  required.  Indeed,  some 
are  inclined  to  look  upon  the  position  as  a  sinecure,  a 
place  of  honor,  and  to  be  sought  after  on  that  account. 

Although  directors  are  put  to  all  the  inconvenience  and 
labor  indicated  above,  they  have  no  more  share  in  the 
benefits  arising  therefrom  than  have  the  other  stock- 
holders. It  is  argued  that  an  association  is  a  business 
enterprise.  The  men  and  women  who  compose  the  mem- 
bership of  the  association  do  not  work  for  their  own 
employers  except  for  wages.  They  do  not  give  their  own 
services  without  pay.  On  the  other  hand  they  are  the 
employers  of  the  directors  of  their  association.  Should 
they  require  their  own  employes  to  serve  without  pay? 

But  if  directors  are  to  be  paid  it  must  be  decided  how 
much,  and  upon  what  basis.  This  is  answered  in  a  gen- 
eral way  by  saying  that  it  must  be  only  for  services  actu- 
ally rendered.  In  the  operations  of  an  association  each 
officer,  each  director,  has  an  assignment  of  actual  duties 
to  perform,  and  if  paid  at  all  he  should  be  paid  in  pro- 
portion to  the  amount,  the  character,  and  the  responsi- 
bility of  his  work.  In  certain  private  corporations  it  has 
become  the  custom  to  pay  each  director  a  certain  stated 

[2111 


CHAPTER  XV. 

sum  for  each  meetini^  he  attends.  When  absent  from  a 
meetinj;^  he  receives  no  pay.  It  is  argued  that  the  intro- 
duction of  this  system  into  the  operations  of  a  building 
association  would  have  a  good  effect  in  two  ways.  First, 
it  would  secure  the  regular  attendance  of  directors; 
second,  it  would  secure  better  service  from  directors ;  for, 
by  regular  attendance  upon  the  meetings  and  participa- 
tion in  the  business,  each  director  will  have  a  better  un- 
derstanding of  all  the  plans  and  details,  and  hence,  his 
services  will  be  more  valuable. 

There  are  three  things  to  consider  in  fixing  the  amount 
of  remuneration,  if  it  should  be  decided  that  directors 
shall  be  paid.  The  pay  must  be  somewhat  in  proportion 
to  the  number  of  meetings,  the  amount  of  business 
transacted,  and  the  number  of  directors.  Three  proposi- 
tions have  been  made  in  this  connection :  ( i )  That  each 
director  be  paid  a  stated  sum  for  each  meeting  he  attends ; 
(2)  That  the  directors  be  paid  a  certain  per  cent  upon  the 
amount  of  business  transacted;  (3)  That  each  director 
be  paid  a  stated  salary  per  year  or  per  term  of  service. 

This  opens  up  a  large  field  for  discussion  which  it 
would  be  inappropriate  to  attempt  to  occupy  here.  This 
one  practical  suggestion  may  be  made,  to  wit : — Let  the 
number  of  directors  be  adapted  to  the  actual  needs  in  the 
transaction  of  the  business  of  the  association  just  as  in 
any  other  business  enterprise.  Let  the  number  of  meet- 
ings also  be  adjusted  so  as  best  to  meet  the  requirements 
of  the  association.  Then  upon  some  basis  let  the  direc- 
tors be  paid  for  actual  services  rendered.  It  will  certainly 
happen  that  the  agitation  of  this  question  will  lead  to  the 
introduction  of  better  business  methods  in  the  manage- 
ment of  associations,  and  it  may  tend  to  lessen  their  num- 
ber, to  concentrate  the  business  into  fewer  hands,  to  fix 
responsibility  more  closely,  and  possibly  to  the  establish- 
ment of  regular  offices  open  during  all  business  hours  as 

[212] 


ELECTION  AND  DUTIES  OF  OFFICERS. 

well  as  on  certain  evenings  for  the  transaction  of  business, 
the  same  as  in  banks  or  private  corporations,  and  already 
in  existence  in  some  building  associations. 

Salary  of  Secretary.  • 

What  is  said  above  does  not  apply  to  the  salary  of  the 
secretary.  The  salary  of  this  officer  should  not  be  based 
upon  the  work  done  in  the  meetings.  His  duties,  even  in 
this  respect,  are  very  exacting.  He  must  attend  all  meet- 
ings, keep  the  accounts  of  receipts  and  disbursements,  and 
also  the  minutes  of  the  proceedings.  But  much  the 
greater  proportion  of  his  work  is  outside  of  the  meetings, 
in  posting  his  books,  calculating  dividends,  and  attending 
to  the  innumerable  details  connected  with  his  office.  It 
is  very  essential  that  a  secretary  should  be  competent  and 
faithful,  and  such  a  secretary  should  be  liberally  paid  for 
his  work.  In  some  states  the  active  executive  officer  of 
an  association  is  designated  as  "secretary."  In  Massa- 
chusetts it  is  the  "treasurer,"  and  in  other  places  he  is 
designated  as  "manager." 


[213J 

IS 


CHAPTER  XVI. 

Powers  and  Liabilities. 

General  Powers. 

A  building  association,  being  in  the  nature  of  a  joint- 
stock  corporation,  possesses  the  general  powers  belonging 
to  corporations  of  that  class.  These  are  usually  laid 
down  in  the  statutes  of  the  different  states  about  as 
follows : 

1.  To  have  perpetual  succession; 

2.  To  have  a  corporate  seal ; 

3.  To  make  contracts  and  to  hold  real  estate  in  a  cor- 
porate capacity; 

4.  To  sue  and  to  be  sued ;  and 

5.  To  make  rules  for  their  own  government. 

An  association  may  not  go  beyond  its  statutory  limita- 
tions and  privileges  and  assume  functions  and  preroga- 
tives not  granted  in  its  charter.  Such  action  would 
jeopardize  the  continuance  of  the  charter  itself  and  tend 
to  render  all  acts  of  the  association  invalid. 

Perpetual  Succession. 

The  right  of  perpetual  succession  is  essential  to  the 
purpose  of  the  association,  for,  though  the  membership 
and  the  officers  of  the  association  may  be  changed  more 
or  less  from  time  to  time,  the  association  itself  must 
maintain  an  organic  existence  until  it  has  completed  its 
course.  Otherwise  it  would  be  impossible  for  such  an 
organization  to  carry  out  its  mission.  While  the  associa- 
tion exists,  it  remains  in  the  eye  of  the  law  an  entity, 
notwithstanding  any  changes  that  may  take  place  from 
time  to  time  in  its  elements. 

[214] 


POWERS  AND  LIABILITIES. 

The  Corporate  Seal. 

The  seal  of  an  association  is  the  official  stamp  by  which 
the  papers  executed  as  a  part  of  its  official  business  are  to 
be  identified  and  verified.  The  seal  must  be  in  the  form 
of  a  stamp  which  will  make  an  impression  into  wax  or 
paper.  Its  custody  and  the  manner  of  its  use  should  be 
prescribed  in  the  rules  of  the  association.  The  affixing 
of  the  seal  to  an  instrument  should  be  accompanied  by 
the  official  signatures  of  the  president  and  the  secretary. 
Some  associations  require  the  signature  of  other  officers 
also.  There  has  been  much  litigation  in  reference  to  the 
use  of  corporate  seals,  and  the  rule  has  been  established : 
"Wherever  the  law  requires  a  natural  person  to  attach  a 
seal  to  the  instrument  executed  by  him,  in  like  cases  only 
would  it  be  necessary  for  the  corporation  to  execute  a 
like  instrument  by  a  corporate  seal."  The  mistake  should 
not  be  made  that  an  association  is  not  liable  for  contracts 
that  are  not  verified  by  its  seal.  On  the  contrary  it  is 
liable  for  all  undertakings  that  are  expressed  or  implied 
by  its  acts. 

It  must  not  be  understood  that  every  association  is 
required  to  possess  a  seal.  The  possession  of  a  seal  is 
essential  only  when  required  by  the  statutes  or  the  con- 
stitution of  the  association.  As  a  matter  of  fact  a  large 
proportion  of  the  associations  in  operation  do  not  use 
seals. 

Contracts  and  Agents. 

An  association  may  make  contracts  and  purchases  and 
sales  directly  through  its  corporate  meeting.  But,  like 
other  corporations,  it  usually  acts  through  officers  and 
agents,  as  heretofore  explained  in  the  discussion  of  the 
duties  of  officers.  It  is  necessary  that  the  rules  provide 
fully  for  the  i)roper  execution  of  all  contracts,  that  they 
designate  the  manner  in  which  they  arc  to  be  made,  and 

[216J 


CHAPTER  XVI. 

the  officers  who  are  empowered  to  act  for  the  association. 
When  officers  are  once  appointed  with  power  to  make 
contracts  then  the  general  laws  relating  to  the  subject  of 
agency  apply  to  associations,  their  agents,  and  third 
parties. 

Concerning  appointments  of  agents,  it  has  been  held 
that  an  agent  may  act  without  written  authority,  or  any 
authentication  by  the  corporate  seal  of  an  association  if 
a  seal  is  used,  provided  his  appointment  is  regular  in 
other  respects ;  that  any  person,  even  a  minor,  may  by  due 
appointment  become  an  agent  of  an  association ;  and  that, 
in  certain  cases,  a  member  of  an  association  as  its  agent 
may  deal  with  himself  or  with  himself  as  the  agent  of  a 
third  party,  provided  no  special  advantage  is  secured  on 
either  side  through  the  arrangement. 

Since  the  appointment  of  the  officers  of  an  association 
is  a  matter  of  public  record,  third  parties  in  dealing  with 
them  must  satisfy  themselves  of  their  authority  to  act  as 
agents.  So  long  as  agents  of  associations  act  within  the 
limits  of  the  authority  conferred  upon  them  the  associa- 
tion is  bound  by  their  acts.  If  an  agent  makes  contracts 
in  excess  of  his  authority,  they  may  afterwards  be  ratified 
and  accepted  by  the  association  or  its  board  of  directors. 

In  order  to  make  his  contracts  in  due  form  and  bind- 
ing, an  agent  must  specify  in  the  papers  which  he  ex- 
ecutes that  the  writing  is  done  by  the  hand  of  an  agent. 
Notice  properly  served  upon  an  agent  is  a  notice  to  the 
principal  in  the  transactions  for  which  he  is  employed.  A 
notice  conveyed  through  one  director  to  the  board  at  a 
regular  meeting  is  a  notice  to  the  association.  Or  a 
notice  conveyed  to  any  director  while  engaged  in  the 
business  of  the  association  is  a  notice  to  the  association, 
but  is  not  a  legal  notice  if  given  to  him  when  not  so 
engaged. 

[216] 


POWERS  AND  LIABILITIES. 

A  notice  published  in  a  newspaper  is  not  a  legal  notice 
unless  it  relates  to  matters  required  to  be  so  published. 
Private  knowledge  on  the  part  of  a  director  or  officer, 
obtained  from  rumor  or  in  any  other  accidental  way. 
cannot  be  regarded  as  an  official  notice  to  the  association. 
A  new  board  of  directors  is  presumed  to  know  all  the 
facts  and  circumstances  known  by  or  communicated  to 
the  previous  board.  An  officer  or  agent  of  an  associa- 
tion cannot  delegate  his  authority  to  another  person,  ex- 
cept where  some  special  provision  is  made  to  that  end. 

Suits. 

As  a  necessary  result  of  its  power  to  make  contracts 
an  association  has  the  right  to  enforce  such  contracts  by 
suit  if  necessary.  On  the  other  hand  as  a  party  to  these 
contracts,  the  association  itself  is  liable  to  legal  process 
for  the  violation  of  any  of  its  obligations.  An  associa- 
tion may  bring  suit  against  individuals  or  corporations  to 
enforce  its  legal  and  equitable  rights;  and  may  in  like 
manner  bring  suit  against  its  own  delinquent  officers  and 
members.  On  the  other  hand  it  is  liable  to  be  sued  by 
outsiders  or  by  its  own  officers  and  members  for  any 
actionable  neglect  or  delinquency  on  its  own  part. 

No  general  rule  can  be  given  for  the  issuing  of  pro- 
cesses for  and  against  building  associations,  since  the  re- 
quirements vary  under  the  laws  of  the  different  states. 
These  legal  requirements  must,  of  course,  in  all  such 
cases  be  carefully  observed.  Such  matters  should  be  at- 
tended to  by  the  attorneys  of  associations.  To  enter  upon 
a  general  specification  and  discussion  of  the  grounds  upon 
which  suits  may  be  brought  by  or  against  associations 
would  be  an  undertaking  too  elaborate  and  foreign  to  the 
purpose  of  this  work.  These  matters  are  well  defined 
under  the  general  anrl  special  legislation  of  the  different 
states. 

[217] 


CHAPTER  XVI. 

Rules. 

Two  general  principles  may  be  laid  down  concerning 
the  adoption  of  rules  for  the  government  of  an  associa- 
tion. The  first  is  that  the  rules  must  conform  to  the 
constitution  and  laws  of  the  United  States,  and  also  of 
the  state  in  which  the  association  exists.  And  the  second 
is  that  they  must  conform  to  the  purposes  for  which  the 
association  is  organized.  Forms  for  constitution  and  by- 
laws are  printed  in  the  appendix. 

Special  Powers. 

Associations,  as  a  rule,  in  the  different  states  are 
clothed  with  certain  special  powers.  What  these  powers 
may  be  for  any  particular  association  in  any  particular 
state  must  be  learned  from  an  examination  of  the  statutes 
in  that  particular  state  and  of  the  charter  of  that  particu- 
lar association.  When  the  statutes  are  silent  upon  any 
particular  power,  neither  permitting  nor  prohibiting  it, 
or  if  doubt  exists,  the  legal  rights  of  an  association  in  the 
premises  may  be  determined  by  application  to  the  at- 
torney general,  or  by  bringing  action  before  the  courts. 

Among  the  special  powers  which  an  association  may 
or  may  not  possess  under  the  statutes  and  its  charter,  or 
independent  of  these,  are  the  rights  to  borrow  money,  to 
acquire  and  to  hold  real  estate,  to  build  houses,  etc.  But 
some  special  powers  are  conferred  upon  associations  gen- 
erally, such  as  the  authority  to  impose  and  collect  fines. 
To  determine  the  special  powers  of  any  association  is  a 
matter  for  legal  inquiry,  and  in  all  cases  should  be  re- 
ferred to  the  proper  legal  authorities. 

Dissolution, 

In  the  case  of  a  terminating  association  it  becomes 
dissolved  as  a  matter  of  course  at  the  expiration  of  the 
time    for    which    it    was    incorporated    and    its    charter 

[218] 


POWERS  AND  LIABILITIES. 

granted,  or  when  its  stock  matures.  In  some  states  the 
period  of  existence  is  fixed  by  the  statutes.  If  the  mem- 
bers of  an  association,  or  an  essential  portion  of  them 
should  die,  it  would  terminate  its  existence.  The  mem- 
bers may,  by  unanimous  agreement,  surrender  the  charter 
of  an  association  and  its  franchises. 

-It  has  been  held  that,  where  there  is  no  express  pro- 
vision on  the  subject,  a  majority  of  the  members  may,  by 
resolution,  surrender  the  charter  and  dissolve  the  associa- 
tion. But  they  cannot  do  this  against  the  resistance  of 
the  minority.  An  association  is  not  dissolved  by  mere 
neglect  or  indifference  on  the  part  of  the  members  which 
leads  them  to  fail  in  the  discharge  of  their  duties. 

The  insolvency  of  an  association,  or  the  refusal  of 
members  to  keep  up  their  stock-payments,  or  the  omission 
to  elect  officers,  does  not  work  a  dissolution  of  the  asso- 
ciation. Associations  may  be  dissolved  by  act  of  the  leg- 
islature or  decree  of  court,  where  such  dissolution  does 
not  impair  the  obligation  of  contracts.  Such  dissolution 
is  usually  brought  about  by  the  state  itself,  caused  by  the 
non-use  or  the  mis-use  of  the  franchises  of  the  association. 

In  all  cases  when  the  grant  of  the  charter  is  found  to 
have  been  defective  in  any  material  part,  or  when  it  has 
been  granted  to  persons  imperfectly  qualified  to  receive  it, 
or  upon  improper  representations,  it  is  competent  for  the 
state  to  rescind  its  action  and  to  dissolve  the  association. 
In  case  of  the  mismanagement  of  the  affairs  of  an  asso- 
ciation, or  where  the  sy.stem  of  the  operation  is  such  as  to 
involve  losses,  the  courts  may,  upon  proper  application, 
appoint  a  receiver  to  take  charge  of  its  affairs  and,  if 
necessary,  to  wind  it  up.  In  the  dissolution  of  an  associa- 
tion, or  the  winding  up  of  its  affairs,  many  questions  of 
equity  and  of  law  are  involved,  which  must  be  anticipated 
in  the  rules,  or  be  submitted  at  the  time  of  dissolution  to 
proper  judicial  or  legal  authority. 

1219J 


CHAPTER  XVII. 

Practical  Questions  Answered. 

Explanatory  Notk. — There  are  numerous  questions  which  con- 
tinually arise  in  reference  to  the  practical  workings  of  associations 
which  require  specific  answers.  A  number  of  the  more  important  of 
these  are  grouped  together  and  answered  in  this  chapter.  In  this 
same  connection  various  practical  suggestions  are  made  which  will 
be  found  of  value  in  the  transaction  of  the  actual  business  of 
associations. 

Borrowing  ^oney. 

Who  may  borrozvf  It  is  generally  understood  that 
none  but  members  may  borrow  money  from  an  associa- 
tion. This  is  true,  but  it  sometimes  leads  to  a  misunder- 
standing. While  it  is  a  fact  that  only  members  may  bor- 
row, it  is  also  true  that  any  person  may  become  a  member 
at  any  time  with  but  trifling  cost,  and  may  immediately 
become  a  borrower.  The  constitution  and  by-laws  of  an 
association  contain  the  terms  and  conditions  upon  which 
its  money  is  loaned,  and  are,  in  a  sense,  a  portion  of  the 
contract  or  agreement  between  the  borrower  and  the 
association.  Hence  the  necessity  of  every  borrower  be- 
coming a  member  and  affixing  his  signature  to  the  consti- 
tution and  by-laws  or  to  a  special  card  for  that  purpose. 
With  this  understanding  of  the  matter,  the  answer  may 
be  given  that  anybody  may  borrow  money  from  an 
association. 

For  what  purpose  may  money  be  borrowed  f  As  indi- 
cated in  a  previous  chapter,*  many  persons  suppose  that 

•  See  Chapter  XIII. 

[220] 


PRACTICAL  QUESTIONS  ANSWERED. 

money  cannot  be  borrowed  from  a  building  association 
except  for  building  purposes.  As  there  explained,  an 
association  has  nothing  to  do  with  the  purpose  for  which 
money  is  borrowed.  The  sole  duty  of  the  association  is 
to  see  that  in  making  the  loan,  it  is  protected  by  ample 
security.  A  member  therefore  may  borrow  money  for 
any  purpose  whatever. 

What  amount  may  be  borrozvedf  The  financial  transac- 
tions of  an  association  with  its  members  are  always  based 
upon  shares.  Shares  are  for  different  amounts,  and  mem- 
bers are  allowed  to  own  different  numbers  of  shares  in 
different  associations.  But  the  question  may  be  answered 
in  a  general  way  by  saying  that  a  member  may  borrow 
the  full  amount  of  the  paid-up  value  of  the  shares  he 
holds,  or  any  part  thereof,  provided  the  security  he  offers 
is  satisfactory.  Thus,  if  the  shares  of  an  association  are 
$500  each,  and  a  member  is  a  subscriber  for  three  shares, 
he  may  borrow  $1,500  or  any  part  thereof.  But  in  order 
to  avoid  complications  in  accounts,  most  associations 
have  the  rule  that  money  must  be  borrowed  in  even  hun- 
dreds of  dollars. 

IVhat  must  be  the  character  and  amount  of  securityf 
This  is  determined  by  the  rules  of  associations.  Generally, 
however,  the  security  required  is  first  mortgage  on  real 
estate  in  the  county  where  the  association  operates,  or  an 
assignment  of  the  stock  of  the  association  on  which  there 
has  been  paid  in  more  than  the  amount  of  the  loan.  The 
rule  is  to  make  no  loans  on  property  already  encumbered, 
no  matter  how  valuable  the  property  or  small  the  encum- 
brance. But  the  money  borrowed  may  be  used  Xo  raise 
an  encumbrance  on  the  j)roperty  offered  as  security.  Sorac 
associations  accept  as  collateral  security,  government  and 
corporation  bond.s,  first  mortgage  notes,  etc. 

An  association  will  usually  loan  money  to  the  amount 
of  about  two-thirds  of  the  value  of  the  property  offered 

12211 


CHAPTER  XVII. 

as  security.  The  vahie  of  the  property  is  determined  by 
an  a(»praising  committee,  composed  of  members  of  the 
board  of  directors  of  the  association. 

What  is  the  cost  of  a  loan?  The  cost  of  a  loan  is  made 
up  of  the  incidental  exjienses,  the  interest,  and  the  pre- 
mium, if  any  is  charged.  The  incidental  expenses  con- 
sist of  the  fees  for  appraising  property,  attorney's  fees  for 
examining  the  title  and  preparing  and  recording  the 
mortgage,  traveling  expenses  if  there  should  be  any,  and 
other  such  incidental  matters.  The  rate  of  interest  is 
fixed  in  the  rules  of  the  association,  and  is  generally  at  so 
many  cents  per  week  or  month  on  each  share  or  part 
thereof  loaned.  The  premium  is  the  amount  which  the 
borrower  bids  when  money  is  sold  for  the  privilege  of 
borrowing.  The  premium  is  in  the  form  of  so  many 
cents  per  week  on  each  share  or  part  thereof  borrowed, 
in  addition  to  the  rate  of  interest  fixed  by  the  rules  of 
the  association.  The  payment  of  one  cent  per  week  on 
$ioo  is  equivalent  to  about  one-half  per  cent  per  annum 
interest.  With  this  as  a  basis,  there  will  be  but  little 
difficulty  in  calculating  the  cost  of  a  loan  when  interest 
and  premium  are  combined. 

Some  associations  have  a  rule  to  the  efifect  that  bor- 
rowers are  not  required  to  draw  out  the  entire  loan  at 
first  but  may  draw  it  in  installments  as  needed,  and  that, 
in  such  cases,  interest  will  be  charged  only  from  the  time 
that  the  money  is  actually  received.  This  arrangement 
is  an  esi')ecial  convenience  to  persons  who  are  building 
and  who  desire  to  make  payments  as  the  work  progresses. 
It  is  also  convenient  to  persons  who  have  obligations  to 
meet  at  stated  periods  as,  for  it>stance,  notes  in  bank  fall- 
ing due  at  intervals.  They  can  in  this  way  use  their 
money  in  installments  without  risk  or  waste.  But  the 
more  general  rule  is  that  the  full  amount  of  interest  and 
premium  is  charged  up  from  the  time  the  loan  is  made 

[2221 


PRACTICAL  QUESTIONS  ANSWERED. 

and  the  security  is  given,  whether  all. the  money  is  drawn 
out  at  that  time  or  not,  provided  of  course,  that  the 
money  is  on  hand  and  ready  to  be  paid  to  the  borrower. 

Hoiv  arc  loans  repaid f  As  stated  before,  loans  are 
based  upon  shares.  A  borrower  must  keep  up  his  regular 
weekly  (or  monthly)  payments  of  dues,  and  in  addition 
to  this,  the  regular  weekly  (or  monthly)  installments  of 
interest  and  premium  as  they  fall  due.  We  will  suppose 
that  a  member  has  secured  a  loan  of  $i,ooo,  that  the 
regular  dues  are  $i.oo  per  week  on  each  share  of  $500, 
that  the  regular  interest  is  12  cents  per  week  per  $100, 
and  that  the  premium  which  he  agreed  to  pay  is  at  the 
rate  of  2  cents  per  week  per  $100.  His  regular  weekly 
payments  therefore  would  be:  dues  $2.00,  interest  $1.20, 
and  premium  20  cents;  total  $3.40.  If  payments  should 
be  made  monthly  instead  of  weekly,  there  would,  of 
course,  be  a  proportionate  increase.  The  amount  to  be 
paid  regularly,  however,  will  vary  from  time  to  time 
according  to  such  arrangements  as  the  borrower  may 
make.  In  some  associations  he  may  pay  more  or  less 
than  the  regular  amount  of  dues  per  week.  He  may  pre- 
fer to  pay  interest  and  premiums  in  advance.  When  this 
rule  holds,  the  amount  he  pays  in  goes  to  his  credit  upon 
his  shares  and  begins  to  draw  dividends,  which  are  usual- 
ly compounded  semi-annually  the  same  as  are  all  other 
deposits.  The  greater  the  amount  he  pays  in  in  install- 
ments the  more  quickly  of  course  will  his  credits  and 
dividends  together  amount  to  the  $1,000  which  is  neces- 
sary to  pay  off  his  loan. 

IIozv  much  time  is  required  to  pay  up  a  loan?  This 
will  depend  upon  four  things:  (1)  the  rate  of  interest; 
(2)  the  amount  of  the  regular  weekly  (or  monthly)  pay- 
ments; (3)  the  amount  of  premium;  (4)  the  amount  of 
dividends  earned  by  the  association. 

1228J 


CHAPTER  XVII. 

Where  the  rate  of  interest,  amount  of  premium,  and 
the  earnings  of  an  association  are  nearly  uniform,  then  of 
course  the  length  of  time  will  depend  simply  upon  the 
amount  of  the  payments. 

Advantages  of  a  Building  Association  Loan.  With 
many  a  person  it  is  easy  to  pay  off  a  loan  in  installments 
where  it  would  be  imi)Ossihle  to  meet  the  entire  indebted- 
ness at  once.  Money  borrowed  from  private  persons  or 
corporations  is  usually  loaned  on  mortgage  for  one  year. 
At  the  end  of  the  year  it  must  either  be  paid  or  a  new 
loan  must  be  negotiated  which  involves  a  repetition  of  all 
the  original  trouble,  expense  and  anxiety.  The  time  when 
a  note  is  coming  due  which  is  secured  by  a  mortgage  on 
one's  home  is  not  a  pleasant  day  to  which  to  look  for- 
ward. It  so  often  happens  that  the  money  which  the 
borrower  thought  he  would  have  saved  up  against  the 
evil  day  is  not  forthcoming.  Indeed,  not  infrequently  the 
borrower  finds  diflficulty  in  paying  even  the  interest.  In 
borrowing  from  a  building  association  all  this  annual  or 
periodical  uneasiness  is  avoided.  Each  week  or  month 
takes  care  of  itself,  the  burden  is  evenly  distributed,  and 
one  can  readily  regulate  his  habits  and  manner  of  life  to 
conform  to  his  necessities.  Week  by  week  the  regular 
installments  are  paid,  almost  without  feeling  them,  and 
the  loan,  which  would  otherwise  be  a  hardship  if  paid  in 
one  sum,  is  carried  and  ultimately  paid  off  with  ease. 

In  borrowing  from  an  association  a  member  should 
make  such  arrangements  for  his  payments  as  are  not 
likely  to  become  burdensome.  It  is  better  to  arrange  to 
make  them  as  low  as  is  consistent  with  safety.  Then  if, 
from  time  to  time,  the  borrower  finds  that  he  can  pay 
more  than  the  agreed  amount  let  him  do  so.  And  the 
amount  thus  paid  in  advance  will  not  only  stand  to  his 
credit  but,  in  many  associations,  will  draw  dividends  in 
his   favor.       Moreover,   by  thus  getting  some  distance 

[224] 


PRACTICAL  QUESTIONS  ANSWERED. 

ahead  with  his  payments,  in  case  of  sickness,  loss  of  work, 
or  some  other  misfortune,  he  may  cease  making  payments 
for  a  time  without  falHng  in  arrears  or  being  in  danger  of 
losing  his  property. 

If  a  borrower  unexpectedly  finds  himself  able  at  any 
time  to  pay  oflF  all,  or  a  considerable  portion  of  his  loan, 
it  is  better  for  him  to  do  so.  He  not  only  relieves  himself 
of  an  obligation  by  so  doing  and,  in  most  cases  stops  his 
interest,  but  he  puts  himself  in  such  position  that  he  may 
begin  to  accumulate  money  for  himself  which  may  be 
profitably  invested  in  the  association  or  in  some  other 
way. 

Contingent  or  Reserve  Fund. 

Provision  for  a  reserve  fund  is  fixed  by  statute  in 
nearly  all  of  the  states  and  territories.  The  amount  usu- 
ally prescribed  by  the  law  of  the  various  states  has  been 
fixed  at  five  per  cent  of  the  assets  of  the  association.  Many 
of  the  leading  authorities  are  of  the  opinion  that  this 
should  be  increased  to  ten  per  cent.  The  good  results 
secured  from  the  establishment  of  a  reserve  fund  are  seen 
in  the  practical  operation  of  this  idea  in  the  State  of  Ohio. 
In  1 89 1  a  law  was  passed  specifically  providing  for  this 
fund.  Five  per  cent  was  to  be  set  aside  annually  of  the 
net  profits,  until  the  amount  of  five  per  cent  of  the  loans 
had  been  reached.  The  money  placed  in  this  fund  is 
loaned  out,  as  are  the  other  funds  of  the  association,  so 
that  the  members  have  an  adequate  protection,  and  at 
the  same  time  receive  an  income  from  this  source.  In 
many  of  these  associations  a  sufficient  income  is  derived 
therefrom  to  cover  the  operating  expenses.  Thus  it  will 
be  seen  that  the  membership  of  an  association  having  an 
interest  in  this  fund  will  become  a  more  permanent  one 
than  that  association  which  has  no  such  provision. 


CHAPTER  XVII. 

Undivided  Profits, 

In  the  periodical  apportionment  of  the  profits  of  the 
association  there  is  nearly  always  a  little  residue  left  over, 
from  the  fact  that  it  is  a  very  laborious  undertaking  to 
calculate  and  divide  the  gains  down  to  a  very  small  frac- 
tional part.  The  custom  is  to  fix  the  dividend  at  such  a 
rate  as  approximates  closely  to  the  gains  of  the  associa- 
tion, but  which  may  be  expressed  either  by  a  whole  num- 
ber or  a  mixed  number  in  which  the  fraction  is  of  a  con- 
venient denomination  to  use  in  calculations.  To  illustrate : 
The  actual  gains  of  an  association  might  be  s'^Vioo  per 
cent.  Assuming  that  3^  of  one  per  cent  is  placed  to  the 
credit  of  the  contingent  fund,  this  would  leave  5V100 
per  cent.  To  calculate  the  dividends  of  each  member  at 
this  rate  would  put  upon  the  secretary  a  large  amount  of 
very  laborious  figuring  and  involve  no  little  liability  to 
error.  To  avoid  this  the  rate  of  the  dividend  would 
probably  be  fixed  at  5  per  cent.  This  leaves  ®/ioo  of  one 
per  cent  of  the  profits  for  that  term  which  are  undivided. 
Also  in  the  calculations  there  will  be  some  small  undi- 
vided profits. 

Some  associations  pass  these  fractional  portions  of  un- 
divided profits  to  the  credit  of  the  contingent  fund ;  others 
place  them  in  what  is  called  the  undivided  profit  account. 
When  these  are  carried  in  the  latter  way  the  amounts 
left  over  from  period  to  period  should  be  added  to  the 
gains  for  each  closing  period  before  the  dividends  are 
declared.  Where  the  undivided  profits  are  passed  to  the 
credit  of  the  contingent  fund,  they,  of  course,  become 
liable  to  all  the  conditions  covering  that  fund. 

The  new  Ohio  law  provides  for  the  establishment  of 
an  undivided  profit  account  which  has  been  of  great 
service  to  the  associations. 

[226] 


PRACTICAL  QUESTIONS  ANSWERED. 

Quick  Assets. 

Among  the  innovations  in  the  work  of  the  building-, 
loan  and  savings  associations  is  that  institutions  have 
been  compelled  to  modernize  to  meet  the  demands  of 
their  membership.  With  the  growth  of  these  associa- 
tions, the  necessity  of  having  available  securities  at  the 
time  of  industrial  depression  or  other  causes,  securities 
which  would  be  found  marketable,  the  desire  has  been 
to  invest  a  certain  portion  of  the  assets  in  so-called  "quick 
assets,"  such  as  government  or  municipal  bonds.  In 
some  states  legislation  has  been  passed  permitting  the 
associations  to  invest  a  certain  percentage  of  their  total 
assets  in  such  securities.  This  naturally  means  that  the 
income  yield  from  this  line  of  investment  will  be  less 
than  that  made  upon  the  real  estate  holdings  which  are 
productive  of  better  results. 

The  experience  of  associations  investing  in  high-grade 
bonds  as  a  quick  asset  has  not  been  as  satisfactory  as  was 
anticipated.  In  the  last  two  or  three  financial  crises 
which  have  been  experienced  in  this  country,  it  was  found 
that  even  the  highest  grade  of  security  of  this  character 
could  not  be  negotiated  on  any  acceptable  terms.  Other 
types  of  financial  institutions  with  heavy  investments  in 
high-grade  bonds,  which  are  usually  considered  a  quick 
asset,  discovered  that  in  an  acute  financial  crisis,  ready 
money  disappeared  from  the  market,  and  no  buyers  could 
be  found  for  even  the  highest  grade  of  government  or 
municipal  bonds.  Another  very  interesting  fact  was 
disclosed  in  these  times  of  financial  depression,  and  that 
is,  that  no  type  of  financial  institution  suffered  as  little 
inconvenience  or  interruption  to  its  regular  business  on 
account  of  the  depression  as  did  the  building  associations. 
As  a  rule  these  institutions  have  gone  through  crises  of 

1227) 


CHAPTER  XVII. 

this  character  with  less  loss  and  less  inconvenience  and 
interruption  to  their  business  than  any  other  type  of  finan- 
cial institution. 

Since  the  establishment  of  the  Federal  Reserve  Bank- 
ing system  in  this  country,  the  possibility  of  financial 
panics  or  business  depression  from  financial  causes  has 
been  largely  eliminated.  During  the  progress  of  the 
Great  World  War  many  building  associations  invested 
large  sums  in  Government  bond  issues,  but  this  was  done 
for  the  double  motive  of  patriotism  and  desire  to  aid  the 
government,  and  as  a  business  proposition  to  find  a  safe 
investment  for  funds  not  required  by  borrowing  mem- 
bers during  the  period  when  home  building  was  largely 
suspended.  The  object  of  holding  these  securities  as  a 
quick  asset  had  very  little  weight  or  influence  with  the 
associations  making  these  investments. 

yiortgages:   Custody,    Recording,   Etc. 

Mortgages  should  be  placed  upon  the  records  of  the 
county  in  which  the  mortgaged  property  is  located.  This 
should  be  done  immediately  after  their  execution  in  order 
to  secure  the  proper  priority  of  lien.  One  of  the  officers 
of  the  association  (president,  secretary,  or  treasurer) 
should  be  entrusted  with  this  duty.  It  is  advisable  to 
provide  this  ofiicer  with  a  book  containing  certificates  of 
record  to  be  signed  by  the  recorder,  clerk,  or  prothono- 
tary,  with  whom  the  mortgage  is  left  for  recording.  The 
blank  for  these  certificates  should  be  about  as  follows: 

Received  for  record 192 at o'clock 

minutes M.  from  The Building  and  Loan  Associa- 
tion, a  mortgage  given  by to  said  associa- 
tion, dated 192 

of County 

[228] 


PRACTICAL  QUESTIONS  ANSWERED. 

When  a  mortgage  has  been  fully  satisfied  it  should 
be  discharged  forthwith  by  a  certificate  of  satisfaction  by 
the  president,  or  president  and  secretary,  as  the  rule  may 
be,  for  entry  upon  the  county  records.  If  this  certificate 
is  indorsed  upon  the  back  of  the  mortgage  it  may  be  in 
this  form : 

The  foregoing  and  within  mortgage  has  been  fully  paid  and  satis- 
fied and  the  recorder  (clerk,  or  prothonotary,  as  the  case  may  be) 
is   hereby   authorized    to    cancel    the    same    off    of    the    records    of 

County, 

The Building  and  Loan  Association, 

By ,  President 

Secretary. 

If  the  certificate  of  satisfaction  is  upon  a  separate  sheet 
it  must  contain  an  accurate  description  of  the  mortgage 
designated  for  cancellation  with  the  number  of  the  mort- 
gage book  and  the  page  where  the  same  is  recorded  and 
must  be  witnessed  and  acknowledged  with  the  same  for- 
malities required  in  executing  the  mortgage.  Some  state 
laws  require  that  the  release  of  a  mortgage  shall  be  made 
in  this  manner. 

The  mortgages  held  by  an  association  should  not  be 
left  in  the  possession  of  any  one  of  the  officers,  since  this 
places  a  needless  and  irksome  responsibility  upon  such 
officer,  and  since,  in  such  custody,  they  might  be  liable 
to  be  lost  or  mislaid.  They  should  be  placed  in  the  fire- 
proof safe  of  the  association  if  it  has  one.  If  it  has  none 
they  ought  to  be  deposited  in  the  safe  of  some  bank  or  in 
a  safe-deposit  vault,  even  if  a  small  expense  be  incurred 
thereby.  The  mortgages  as  filed  away  should  be  prop- 
erly   arranged,    either    alphabetically    according    to    the 

12291 


CHAPTER  XVII. 

names  of  the  mortg^agors,  or  in  numerical  order  corre- 
sixMiding  with  the  numbers  of  the  members  or  share- 
holders executing  them,  so  that  any  particular  mortgage 
may  be  found  readily. 

If  a  fire  insurance  policy  is  held  as  collateral  to  the 
mortgage,  the  policy  should  be  filed  with  the  mortgage, 
a  band  or  string  holding  the  two  papers  together  or  both 
being  enclosed  in  an  envelope. 

Insurance  Policies  as  Collateral  Security. 

In  all  cases  where  there  are  buildings  upon  the  land 
which  are  included  in  the  mortgage,  fire-insurance  poli- 
cies on  these  buildings  should  be  required.  These  policies 
should  be  assigned  to  the  association  and  kept  on  file 
with  the  association  until  the  loan  has  been  paid  ofT. 

It  should  be  made  the  duty  of  the  secretary  or  of  some 
other  officer  to  keep  a  record  of  all  the  fire  policies  held  as 
collateral  security.  This  record  should  include  the  name 
and  address  of  the  company  or  of  the  agent  issuing  the 
policy  and  a  sufficient  description  of  the  policy  itself  to 
make  it  easily  recognizable.  The  record  should  be  in- 
dexed with  the  names  or  numbers  of  the  shareholders 
assigning  the  policies  so  that  reference  may  be  made  to 
each  readily.  The  record  of  policies  should  also  be  ar- 
ranged in  monthly  groups  showing  when  the  policies 
expire.  It  is  recommended  that  this  expiration  record  be 
kept  in  card  index  form. 

The  month  before  the  expiration  of  a  policy  the  oflficer 
having  charge  of  this  matter  should  notify  the  mortgagor 
and  the  agent  issuing  the  policy,  of  the  approaching  ex- 
piration of  his  policy  and  request  that  it  be  renewed  on  or 
before  the  meeting  day  next  preceding  its  expiration.  At 
this  meeting  the  certificate  of  entry  of  renewal  duly  signed 
by  the  agent  or  representative  of  the  insurance  company 
must  be  furnished  to  said  officer  of  the  association.  When 

[230] 


PRACTICAL  QUESTIONS  ANSWERED. 

an  entry  on  the  policy  by  the  representative  of  the  insur- 
ance company  is  required,  the  policy  should  be  delivered 
to  the  mortgagor  for  that  purpose  to  be  returned  at  the 
meeting  as  before  stated. 

When  the  association  surrenders  a  fire  policy  the  inter- 
est of  the  association  therein  should  be  released.  This 
may  be  done  in  these  words : 

192.... 

The    interest    in    this    policy    which    has    been    held    by    The 

Building  and  Loan  Association  is  hereby 

relinquished. 

,  President. 

Secretary. 

The Building  and  Loan  Association. 

When  a  special  blank  is  used  it  must  give  the  number 
and  the  date  of  the  policy  and  the  name  of  the  insurance 
company  issuing  it,  in  addition  to  the  words  signifying 
relinquishment. 

If  a  loan  is  secure<l  by  mortgage  on  a  terminating 
leasehold  the  policy  of  insurance  should  be  held  as  col- 
lateral until  the  final  satisfaction  of  the  mortgage.  Then 
the  policy  with  the  mortgage  should  be  surrendered  with 
the  proper  certificate  of  satisfaction  as  above. 

Leaseholds. 

When  a  leasehold  is  mortgaged  to  an  association  the 
secretary  or  other  officer  whose  duty  it  may  be  should 
enter  in  a  book  kept  for  that  purpose  a  copy  of  the  for- 
feiture clause  of  the  lease  ;  likewise  the  dates  when  ground 
rents  become  due,  arranged  in  monthly  groups  as  indi- 
cated above  for  the  insurance  policies.  Receipts  for  the 
payment  of  the  rental,   taxes,  and  assessments,  if  any, 

1231 J 


CHAPTER  XVII. 

should  be  presented,  at  the  latest,  at  the  meetinj:;^  preced- 
ing the  expiration  of  the  term  of  forfeitures  and  the  entry 
that  such  receipts  have  been  produced  should  be  made 
on  the  book  of  the  proper  officer. 

Taxes  and  Assessments. 

Mortgagors  should  be  required,  subject  to  penalties 
fixed  by  the  rules,  to  present  to  the  proper  officers  of  the 
association  their  tax  or  assessment  receipts  one  week 
prior  to  the  expiration  of  the  time  limit  for  payment. 
An  entry  should  be  made  in  a  book  kept  for  that  purpose 
to  the  effect  that  such  a  receipt  was  duly  produced. 

Payment  of  Dividends. 

It  is  the  practice  in  some  associations  for  the  members 
to  draw  out  their  dividends  at  the  end  of  each  term.  This 
is  probably  a  bad  rule.  Associations  are  organized  for 
the  purpose  of  enabling  and  encouraging  their  members 
to  save  money.  If  the  members  draw  out  their  dividends 
regularly  they  are  apt  to  expend  this  money  which  they 
might  otherwise  save.  Unless  a  member  absolutely  needs 
his  dividends  it  is  better  for  him  to  allow  them  to  stand  to 
his  credit.  In  associations  where  the  dividends  are  not 
drawn  out  they  usually  are  compounded  from  term  to 
term  and  thus  assist  materially  in  increasing  a  member's 
income.  It  is  an  advantage  to  the  association  also  for  the 
dividends  to  be  left  in  the  treasury.  In  an  average  asso- 
ciation doing  a  prosperous  business,  the  semi-annual 
dividends  will  amount  to  a  considerable  sum  which  can 
be  profitably  loaned  or  invested  by  the  association. 

But  where  the  dividends  are  paid  at  the  end  of  each 
term  the  directors  must  make  special  provision  to  have 
the  money  on  hand  with  which  to  pay  them.  If  dividends 
are  not  forthcoming  when  expected,  suspicions  may  arise 
and  there  may  be  a  loss  of  confidence  among  the  members. 

[232] 


PRACTICAL  QUESTIONS  ANSWERED. 

In  paying  dividends*  it  is  convenient  to  have  each 
member's  money  or  check  placed  in  an  envelope  before- 
hand so  that  on  the  meeting  night  it  can  be  handed  to 
him  without  any  delay.  The  envelope  may  be  printed 
about  as  follows: 


Book  No 

Dividend  of 

The   

Building  and  Loan  Association  for  term  ending 

192.... 

Name  

Amount  $ 

As  the.se  envelopes  containing  the  dividends  are  dis- 
tributed to  the  members  each  member  should  sign  a  re- 
ceipt in  the  following  form : 

192.... 

Received  of  The 

Building  and  Loan  Association  the  sum  of 

dollars  in   full   for  dividend  for  term  ending 

192.... 


Book  No. 


These  receipts  may  be  loose,  or  bound  in  book  form. 
If  loose,  after  they  have  been  signed,  they  should  be  filed 
either  in  the  numerical  order  of  the  members'  pass-books, 
or  in  the  alphabetical  order  of  the  members'  names,  so 
that  they  can  be  referred  to  readily. 

•  For  mrthofls  of  calculating  dividends  and  dividend  tablei  see  Chapter  XXII. 
[233] 


CHAPTER  XVII. 

Some  associations  pay  dividends  by  issuing  warrants 
upon  the  Treasurer  wlio  cashes  them  on  presentation. 
These  warrants  are  in  the  following  form : 

No 

192.... 

Treasurer  of 

The Building  and  Loan  Association  : 

Pay  to  the  order  of the  sum  of 

dollars,   dividend  in   full    for  term 

ending 192 ... . 

t Secretary. 

In  some  states  the  statutes,  and  in  many  associations 
the  rules,  require  that  all  moneys  shall  be  deposited  in 
bank  and  paid  by  check.  When  so  paid  the  check  be- 
comes the  receipt  and  none  other  is  necessary. 

Dues,  Deposit  Sh'^s,  Etc. 

At  the  appointed  time  for  the  payment  of  dues  the 
tables  should  be  cleared  and  conveniently  arranged.  The 
secretary  and  his  assistants  and  the  finance  committee 
should  take  proper  position.  The  dues  book  should 
lie  open  in  the  most  convenient  place  for  use  by  the 
secretary  or  other  person  receiving  the  payments,  and  for 
reference  by  his  assistants  and  the  members  of  the  finance 
committee.  Regular  money  boxes  should  be  provided  for 
assorting  and  depositing  the  money  as  received. 

It  will  greatly  facilitate  business  if  associations  will 
use  deposit  slips  or  deposit  envelopes.  These  are  also  of 
great  advantage  and  convenience  in  checking  up  for  any 
errors  which  may  arise. 

[234] 


■     PRACTICAL  QUESTIONS  ANSWERED. 

Business  Details  in  Large  Associations. 

The  foregoing  paragraphs  apply  to  small  associations 
that  have  one  meeting  night  only  per  week,  for  the  re- 
ceipt of  money  and  transaction  of  business.  When  an 
association  grows  to  larger  size  and  the  volume  of  busi- 
ness is  such  that  it  must  be  kept  open  every  business  day, 
during  business  hours,  the  plan  above  outlined  cannot  be 
followed.  These  larger  associations  during  all  business 
hours  have  someone  present,  usually  the  secretary,  or  his 
assistant,  to  receive  money,  applications  for  loans,  to  pay 
withdrawals  or  transact  any  other  routine  business  which 
may  arise.  Some  associations  require  that  all  payments 
made  shall  be  accompanied  by  a  deposit  slip,  made  out 
by  the  member,  which  he  hands  in  with  his  pass-book 
and  cash  or  check.  The  sum  deposited  is  then  entered  by 
the  party  receiving  it,  in  the  member's  pass-book.  It  is 
no  longer  customary  to  divide  this  payment  into  several 
parts,  of  dues,  interest,  premium  and  fines,  requiring  the 
entry  of  three  or  four  separate  sums  on  the  pass-books, 
but  the  total  payment  made  by  the  member  is  credited  on 
his  pass-book  in  one  lump  sum.  This  practice  simplifies 
the  operation  and  materially  shortens  the  work. 

In  associations  that  do  not  require  the  use  of  deposit 
slips  the  officers  receiving  the  deposits  at  the  same  time 
enter  the  payment  in  the  "Cash  Received"  book  of  the 
association.  This  book  should  be  especially  ruled  and 
printed  for  the  purpose.  It  should  have  columns  for 
name  of  the  member  making  the  payment,  date,  a  column 
for  his  stock  number  and  followed  by  a  number  of  unit 
ruled  cash  columns,  the  first  cash  column  being  headed 
"Total,"  and  the  succeeding  columns  being  headed 
"Loans,"  "Running  Stock"  or  "Installment  Stock," 
"Paid-Up  Stock,"  "Deposits,"  "Temporary  Loans,"  and 
such  other  printed  headings  as  will  indicate  all  the  vari- 
ous purposes  for  which  money  may  be  received.     In  each 

[2351 


CHAPTER  XVII. 

proper  column  should  be  entered  the  date,  name  of  the 
member,  number  of  his  pass-book ;  and  in  the  "Total" 
column  should  be  entered  the  full  amount  which  he  pays. 
This  amount  should  also  be  carried  out  to  the  column 
indicating  the  purpose  for  which  the  payment  is  made. 
If  it  is  made  by  a  borrower,  it  should  be  entered  under 
"Loans."  If  it  is  a  savings  deposit,  it  should  be  entered 
under  "Running  Stock."  If  the  payment  is  for  the  pur- 
chase of  paid-up  stock,  the  entry  should  be  put  in  the 
column  thus  headed,  and  in  the  column  in  which  the 
pass-book  numbers  are  placed  should  be  entered  the 
number  of  the  Paid-Up  Stock  Certificate  which  issue  to 
him.  In  the  column  headed  "Deposits"  should  be  entered 
the  payment  made  by  persons  who  are  not  stockholders, 
but  are  making  payments  on  a  special  deposit  account. 

Where  deposit  slips  are  used  they  are  usually  placed  on 
a  spindle  and  afterward  posted  to  this  "Cash  Received" 
book,  as  above  described.  Some  large  associations  have 
their  "Cash  Received"  book  in  loose-leaf  form,  so  that 
in  rush  hours  where  large  numbers  of  persons  are  re- 
quiring attention,  two  or  more  officers  or  employes  of 
the  association  can  receive  deposits  through  separate 
windows  or  wickets.  This  loose-leaf  form  of  cash  book 
is  not  recommended  where  deposit  slips  are  used. 

At  regular  intervals,  usually  at  the  end  of  each  week 
this  "Cash  Received"  book  is  balanced,  the  several 
columns  footed  and  these  footings  carried  to  the  appro- 
priate account  in  the  General  Ledger. 

The  individual  account  with  each  member  should  be 
kept  either  in  a  loose-leaf  Ledger  system  or  in  a  Ledger 
Card  Index  system.  In  each  case  a  separate  ledger  sheet 
or  ledger  card  is  opened  for  each  member,  and  depositor, 
and  these  should  be  numbered  and  kept  in  the  ledger  or 
card  index  in  numerical  order.  These  ledger  sheets  or 
ledger  cards  should  be  especially  ruled  and  printed,  with 

[236] 


PRACTICAL  QUESTIONS  ANSWERED. 

proper  columns  and  headings  for  keeping  the  individual 
accounts.  The  several  items  in  the  "Cash  Received" 
book  should  be  posted  at  frequent  intervals,  either  daily 
or  weekly,  to  the  individual  accounts  in  the  loose-leaf 
ledger  or  card-index  ledger. 

Disbursements. 

It  should  be  a  fixed  rule  of  every  association  that  all 
cash  received  must  be  deposited  in  the  bank  designated 
by  the  Board  of  Directors,  and  only  disbursed  by  check 
drawn  on  this  bank,  and  signed  by  the  authorized  officer 
or  officers. 

Most  associations  have  these  checks  printed  with  stubs, 
and  bound  in  a  large  book,  from  three  to  five  checks  on 
a  page.  Where  the  association  has  ample  funds  on  hand, 
it  is  usual  for  the  secretary  to  issue  checks  to  withdraw- 
ing members  at  any  time,  upon  request,  and  presentation 
of  their  pass-book  or  certificate,  against  which  the  with- 
drawal is  made.  No  withdrawal  should  be  permitted 
unless  the  pass-book  against  which  it  is  to  be  made  is 
presented  and  the  withdrawal  entered  therein.  Stubs  of 
each  check  issued  should  show  the  date,  the  party  to 
whom  paid,  the  number  of  the  account  to  which  the  dis- 
bursement is  to  be  charged,  whether  a  pass-book  account, 
mortgage  loan,  temporary  loan,  paid-up  stock,  expenses, 
or  other  purposes. 

The  stubs  of  these  checks  should  be  kept  posted  to  the 
"Cash  Disbursed"  b<^ok.  This  book  should  be  ruled  and 
printed  similarly  to  the  "Cash  Received"  book,  with 
columns  showing  the  date,  number  of  the  check,  name  of 
the  party  to  whom  the  check  issues,  the  stock  number, 
to  which  the  disbursement  is  to  be  charged,  and  a  number 
of  unit-ruled  columns,  the  first  having  the  printed  head- 
ing of  "Total,"  and  the  succeeding  columns  printed  head- 
ings, "Loans,"  "BtH)k  Withdrawals,"  "Paid-Up  Stock," 

1237) 


CHAPTER  XVII. 

"Withdrawals,"  "Deposit  Withdrawals,"  "Dividends," 
"Temporary  Loans,"  "Expenses,"  "Salaries"  and  such 
others  as  will  indicate  all  the  several  purposes  for  which 
money  may  be  paid  out  by  an  association.  The  stubs  of 
these  checks  should  be  posted  daily  to  this  "Cash  Dis- 
bursed" book  in  regular  numerical  order. 

The  amount  of  the  check  is  to  be  entered  in  the 
"Total"  column  and  also  carried  out  to  the  proper  column 
indicating  the  purpose  for  which  the  disbursements  were 
made. 

At  frequent  intervals,  at  least  weekly,  the  "Cash  Dis- 
bursed" book  needs  to  be  balanced,  all  the  columns  footed, 
and  the  footings  posted  to  the  proper  accounts  in  the 
General  Ledger. 

Paid-U^  Stock  Ledger. 

It  is  important  to  keep  a  separate  ledger  in  which  to 
enter  the  certificates  of  paid-up  stock  and  the  dividends 
paid  thereon.  This  should  be  especially  ruled  and  printed, 
with  columns  for  entering  the  date,  the  name  of  party  to 
whom  the  certificate  was  issued,  the  number  of  the  cer- 
tificate, the  amount  for  which  it  was  issued,  followed  by 
a  column  in  which  to  enter  the  date  and  check  number 
by  which  the  certificate  is  cancelled.  The  balance  of  the 
folio  pages  should  be  ruled  and  printed  for  dividend 
columns.  Each  dividend  column  properly  consists  of  two 
parts:  one  in  which  to  enter  the  amount  of  the  dividend 
and  another  space  in  which  to  enter  the  date  and  number 
of  the  check  by  which  the  dividend  was  paid.  At  the 
head  of  each  dividend  space  should  be  entered  the  date  of 
the  dividend  entered  in  that  column. 

Semi-AnnuaJ  Settlements  in  Permanent  Associations. 

The  practice  of  making  semi-annual  settlements  and 
declaring  semi-annual  dividends  is  almost  universal,  al- 

[238] 


PRACTICAL  QUESTIONS  ANSWERED. 

though  a  few  associations  make  settlements  and  declare 
dividends  quarterly.  On  these  settlement  days  the  ac- 
counts of  each  borrower  are  charged  with  the  interest 
on  his  loan  for  the  current  fiscal  period.  The  amount  of 
this  interest,  together  with  the  premium,  and  fines,  if 
any,  taxes  and  insurance  paid  by  the  association  for  the 
borrower,  if  any,  are  deducted  from  the  total  payment 
made  by  the  borrower,  during  that  fiscal  period,  and  the 
balance  of  his  payment  is  placed  to  the  credit  of  his  stock, 
or,  as  is  now  becoming  quite  common  in  associations, 
this  balance  is  deducted  from  the  amount  of  his  loan, 
making  a  new  balance  of  indebtedness  on  which  the  inter- 
est is  computed  for  the  following  fiscal  period.  The 
dividends  earned  by  the  several  members  are  credited  to 
their  several  accounts.  At  this  settlement  time  all  pass- 
books should  be  called  in  for  auditing,  compared  with 
the  books  of  the  association  and  dividends  credited 
thereon.  The  borrower's  pass-books  should  show  the 
amount  of  interest  and  other  charges  for  the  current  term. 
When  dividends  are  credited  on  the  pass-books,  they 
become  a  part  of  his  savings  account.  Should  the  owner 
of  the  pass-book  desire  to  withdraw  this  dividend,  he  is 
permitted  to  do  so,  but  it  is  not  treated  as  a  payment  of 
dividend,  but  as  a  withdrawal  from  his  account,  and  is 
so  entered  on  the  "Cash  Disbursed"  book. 


i1  R 


emarKS. 


The  foregoing  is  an  outline  description  of  the  princi- 
pal features  of  practical  work  and  accounting  under  the 
permanent  plan.  Its  full  details  can  not  well  be  explained 
without  the  use  of  diagram  and  bookkeeping  forms, 
which  can  not  be  conveniently  displayed  in  a  book  of 
this  character. 

1239J 


CHAPTER  XVII. 

Paying  Off  Shares. 

Hefore  the  directors  pay  up  shares  in  full  or  relinquish 
iiK^rtgfag^es.  they  should  consider  carefully  the  associa- 
tion's liabilities  so  that  they  may  know — 

1.  What  losses  are  liable  to  occur; 

2.  What  mortgages  are  likely  to  prove  bad; 

3.  What  inside  creditors  the  association  has; 

4.  Whether  or  not  the  existing  reserve  fund  is  suf- 
ficient to  cover  all  such  liabilities. 

Thus  the  directors  may  protect  the  association  from 
any  possible  shortage.  In  case  of  withdrawal  at  any  time 
when  losses  are  pending,  the  shares  withdrawn  should  be 
debited  with  their  equitable  proportion  of  the  impending 
liability.  If  this  is  not  made  the  rule,  knowing  members, 
when  the  association  may  be  under  threatened  temporary 
embarrassment,  would  withdraw  their  shares  and  escape 
without  losses,  while  the  faithful  and  unsuspicious  mem- 
bers remaining  over  would  be  compelled  to  meet  the 
emergency. 

It  must  not  be  imagined  that  this  prudence  is  unneces- 
sary because  of  the  fact  that,  generally  speaking,  build- 
ing associations  conducted  on  the  permanent  plan  are 
prosperous  and  run  alpng  smoothly  from  year  to  year 
without  embarrassment.  Unexpected  circumstances  may 
arise  in  the  affairs  of  an  association  just  as  in  any  other 
business  enterprise.  The  officers,  through  inexperience 
or  carelessness,  may  make  mistakes.  A  neighboring 
association  may  declare  large  dividends.  Then  the  officers 
think  that  their  own  associatioil  can  do  as  well,  and  will 
increase  their  own  dividends  and  pay  out  for  profits  more 
than  the  association  has  earned. 

Any  increase  in  dividends  has  a  very  pleasing  and 
quieting  effect  upon  members.  As  a  result  the  members 
themselves,  under  such  circumstances,  become  more  care- 

[2491 


PRACTICAL  QUESTIONS  ANSWERED. 

less,  and,  in  consequence  without  any  evil  intent  on  the 
part  of  either  officers  or  members,  unexpected  embarrass- 
ment may  arise.  It  is  well  to  anticipate  all  such  emergen- 
cies beforehand,  and  thus  to  be  prepared  for  them.  It  is 
easy  to  under-estimate  an  association's  liabilities  to  bor- 
rowing members  on  the  one  hand,  and  to  over-estimate 
the  value  of  mortgages  on  advanced  shares  on  the  other. 

Another  serious  mistake  which  has  often  been  made, 
principally  in  associations  conducting  their  business  on 
the  gross  premium  plan,  is  to  divide  the  profits  at  the  end 
of  the  fiscal  year.  If  this  is  done  a  member  coming  in 
during  the  second  term  would  afterwards  have  no  share 
of  certain  profits  to  which  in  the  course  of  time  he  would 
be  justly  entitled.  In  some  reports  unearned  premiums 
and  unearned  interest  will  be  found  reckoned  as  assets. 
This  is  certainly  a  mistake  since  in  each  new  term  these 
assets  must  be  reduced  by  the  amount  which  must  be 
placed  to  the  credit  or  profits  for  that  term. 

In  some  instances  we  have  found  reported  as  assets  the 
entire  outstanding  re-payments  having  an  unexpired 
term,  without  any  reduction  or  discount  being  made  for 
the  time  that  must  elapse  before  they  shall  be  paid. 

Associations  which  still  use  the  gross  premium  plan 
should  only  count  as  profits  for  any  fiscal  term,  the  pro 
rata  share  of  the  gross  premium  earned  during  that  term ; 
and  the  gross  premium  should  be  distributed  over  the 
entire  term  that  the  loan  is  to  run. 

It  should  be  understood  that  an  association  which  has 
a  reserve  fund  or  contingent  fund,  is  supposed  to  rely  on 
that  fund  to  cover  losses  that  may  occur,  and  deductions 
from  a  withdrawing  member's  account  to  cover  losses, 
should  not  he  made  unless  it  is  clearly  evident  that  the 
losses  will  exceed  in  amount  the  sum  in  the  reserve  or 
contingent  fund. 

[2411 


CHAPTER  XVIII. 

Auditing:  Its  Necessity  and  Object. 

State  Examinations. 

In  many  of  the  states  the  provisions  of  the  law  require 
that  examinations  be  made  at  specified  times.  While  the 
auditing  done  by  the  state  authorities  has  been  of  untold 
benefit  to  the  movement,  we  are  of  the  opinion  that  the 
associations  themselves  should  pay  the  greatest  attention 
to  this  important  detail  of  the  management  of  these  asso- 
ciations. When  we  consider  the  vast  number  of  associa- 
tions, embracing  a  membership  of  millions  of  people 
who  make  weekly,  semi-monthly  and  monthly  deposits, 
running  into  the  millions,  the  total  aggregate  savings  are 
tremendous.  This  vast  sum  of  money  represents  the 
hard-earned  savings  of  thrifty  and  frugal  citizens,  whom 
circumstances  compel  to  begin  at  the  bottom  of  the  ladder 
in  the  competition  for  material  progress.  They  are  of 
the  class  of  people  who  can  least  afford  to  run  any  risk  or 
suffer  any  loss.  The  money  they  are  thus  accumulating, 
they  are  compelled  to  earn  by  the  sweat  of  their  brows. 
It  is  not  interest,  rent  or  incomes  from  accumulated  capi- 
tal or  investments.  It  is  in  most  cases  their  dependence 
for  the  future,  as  well  as  the  home  itself,  and  for  the 
necessities  and  comforts  of  life.  If  there  is  such  a  thing 
as  sacred  money  anywhere,  it  is  in  these  very  treasuries 
of  the  building,  loan  and  savings  associations. 

Many  a  time  a  person  who  has  lost  some  of  these  sav- 
ings has  been  discouraged  from  ever  again  attempting  a 
similar  effort.  As  a  result,  this  burden  must  be  assumed 
by  others.     The  proper  guardianship  and  protection  of 

[242] 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

these  funds  is,  therefore,  a  matter  of  the  highest  impor- 
tance. It  should  have  the  best  wisdom  of  the  association 
and  of  the  state  for  its  practical  direction.  In  a  report 
of  the  Bureau  of  Statistics  of  Labor  and  Industry  in  New 
Jersey,  the  part  devoted  to  building  and  loan  associations 
makes  the  following  comment  in  regard  to  auditing : 

"In  theory,  the  co-operators  are  neighbors  and  acquaintances, 
present  at  every  periodical  meeting  and  watching  and  auditing  the 
modest  business  transactions  themselves.  And  probably  that  was,  in 
the  early  history  of  the  association,  also  largely  carried  out  in 
practice.  It  is  more  or  less  so  in  the  smaller  concerns.  In  the  com- 
paratively large  enterprises,  and  especially  those  where  the  number 
of  membership  reaches  several  hundred  or  even  thousands,  and  the 
assets  approximate  a  quarter  of  a  million,  such  a  course  is  hardly 
practical.  The  examinations  of  accounts  and  investments  is  usually 
left  to  auditors  who  often  know  little  about  auditing,  and  even  when 
competent,  are  inclined  to  neglect  making  a  thorough  investigation 
which  requires  valuable  time." 

Since  this  was  written  several  associations  in  the 
United  States  have  acquired  a  membership  running  into 
the  thousands,  with  assets  aggregating  many  millions  of 
dollars,  and  the  number  of  associations  having  over  a 
million  dollars  assets  is  increasing  continually.  Thus  it 
will  be  seen  that  the  volume  of  business  has  grown 
phenomenally,  especially  in  well  conducted  associations 
where  they  have  made  it  a  business  to  work  along  pro- 
gressive lines. 

The  grave  importance  of  the  subject  of  auditing  is 
indicated  in  the  extract  quoted,  and  in  some  of  the  figures 
given.  This  matter  should  receive  the  greatest  considera- 
tion in  association  circles.  In  fact,  a  single  association 
that  has  trouble  in  any  part  of  the  United  States  will 
cause  uneasiness  at  some  other  point,  and  it  therefore 
behooves  those  having  the  management  of  associations  in 
charge  to  see  that  the  very  best  auditing  obtainable  is 
secured  for  their  respective  institutions. 

12-13] 


CHAPTER  XVIII. 

An  ordinar)'  business  enterprise  is  usually  carried  on 
by  an  individual,  a  firm  or  a  private  corporation.  In  such 
cases  the  actual  managfers  of  the  business,  as  a  rule,  carry 
a  large  part  of  the  risk.  It  is  their  own  money  that  is 
invested  in  the  business.  They  invest  this  according  to 
their  own  judgment,  and  handle  the  business  at  their  own 
discretion.  In  consequence  they  are  naturally  watchful 
and  painstaking  in  all  they  do,  their  time  and  thought 
being  devoted  to  the  business.  If  the  business  prospers, 
well  and  good.  But  if  they  find  that  it  is  not  prospering 
they  may,  without  consulting  anyone,  proceed  to  close 
it  up. 

In  the  management  of  a  building  association  the  con- 
ditions are  different.  The  directors  and  officers  have 
some  financial  interest  in  it,  but  this  interest  is  likely  to 
be  of  minor  importance  as  compared  with  their  other  and 
outside  individual  interests,  and  it  is  also  unimportant 
as  compared  with  the  aggregate  interest  of  the  associa- 
tion. The  case  is  different  in  the  management  of  any 
private  individual  enterprise,  or  of  the  business  of  any 
regular  business  firm  or  corporation.  In  a  private  enter- 
prise the  managers  give  to  the  business  their  whole  time 
and  thought.  In  the  management  of  the  business  of  a 
building  association  it  is  only  incidentally  that  time  and 
thought  are  given  to  it. 

Let  the  officers  of  an  association  be  ever  so  conscien- 
tious, ever  so  much  interested,  nevertheless  the  opportuni- 
ties for  error  are  greater  in  an  associated  than  in  a  private 
enterprise.  An  association's  business  is  open  to  many 
more  risks  of  the  misuse  or  non-use  of  powers  on  the 
part  of  managers  than  is  the  case  where  proprietary 
interests  are  involved  and  the  management  is  embodied  in 
one  or  a  few  men  whose  duty  and  interest  it  is  to  make  it 
their  sole  occupation  to  watch  over  and  administer  their 
own  affairs. 

[244] 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

These  facts  give  rise  to  a  special  necessity  for  the  sys- 
tematic and  regular  auditing  of  the  accounts  of  every 
co-operative  enterprise.  This  necessity  is  of  a  dual  and 
reciprocal  nature.  It  is  necessary  on  the  one  hand  for  the 
protection  of  the  society's  interests  and  the  individual 
interests  of  the  members.  On  the  other  hand  it  is  essen- 
tial for  the  protection  and  proper  endorsement  of  the 
officers  in  the  discharge  of  their  duties. 

Indirectly,  also  another  important  reason  exists  for  the 
careful  administration  and  auditing  of  the  affairs  of  every 
building  association.  It   is  only  by  such   systematic 

watchfulness  that  the  best  success  and  prosperity  of  an 
association  can  be  secured  and  assured.  Any  failure  of 
an  association,  be  it  complete  or  partial,  is  very  unfor- 
tunate, not  only  for  the  individual  shareholders  but  also 
for  the  community.  Such  an  occurrence  goes  far  towards 
creating  a  distrust  of  this  method  of  co-operation.  Such 
a  distrust  once  aroused  is  likely  to  continue  for  one  or 
two  generations.  Persons  who  lose  money  in  a  building 
association  will  be  very  slow  to  risk  their  earnings  in 
another  such  institution,  and  their  families,  neighbors, 
and  friends  will  be  influenced  strongly  by  their  opinion 
and  attitude.  Such  a  failure  not  only  causes  embarrass- 
ment to  associations  already  in  operation,  but  prevents 
the  establishment  of  other  associations  in  that  immediate 
vicinity.  The  influence  goes  farther,  for,  those  who  have 
suffered  by  it,  removing  into  new  neighborhoods  and 
communities,  even  at  a  great  distance,  carry  with  them 
the  story  of  their  unfortunate  experience,  and  this  may  be 
sufficient  to  prevent  the  establishment  of  such  .societies 
elsewhere.  Ujjon  this  gnniiid  alone  it  behooves  all  per- 
sons who  are  interested  in  the  welfare  of  this  form  of 
co-oi)cration,  and  who  are  convinced  of  the  good  that  it 
is  accomplishing,  and  of  the  great  future  that  awaits  it, 

[245] 


CHAPTER  XVIII. 

to  insist  upon  the  regular  and  responsible  auditing  of  the 
accounts  in  the  associations  with  which  they  are  con- 
nected. 

Many  other  considerations  of  Hke  general  character, 
showing  the  necessity  of  the  regular  and  thorough  audit- 
ing of  the  accounts  of  building  associations,  will  suggest 
themselves  to  the  intelligent  reader,  and  need  not  be 
mentioned  here.  Many  large  associations  are  carefully 
audited  by  chartered  public  accountants  and  when  the 
business  of  an  association  is  of  sufficient  size  to  warrant 
it,  this  course  is  recommended. 

Purposes  of  Auditing. 

The  wholesome  effect  of  official  supervision  and  com- 
pulsory auditing  on  part  of  the  state  is  now  generally 
recognized,  and  the  indications  are  that  its  sphere  will  be 
extended  and  perfected  in  the  future.  That  this  system 
of  co-operative  saving  shall  have  continued  popularity  it 
must  hold  the  confidence  of  the  people.  This  can  be 
accomplished  only  by  throwing  about  it  such  wise  safe- 
guards as  experience  has  shown  to  be  necessary  in  order 
to  make  and  keep  it  worthy  of  such  confidence. 

Auditing  is  supervision  practically  applied.  It  means 
not  only  testing  the  accuracy  and  the  trustworthiness  of 
the  accounts,  and  the  honesty  and  efficiency  of  officers, 
but  it  includes  also  the  testing  and  the  perfecting  of 
methods,  and  the  securing  of  practical  economy.  It  in- 
volves the  proving  of  the  conduct  of  an  association  by 
the  fundamental  principles  upon  which  this  forni  of  co- 
operation is  based  on  the  one  hand,  and  also  by  external 
checks  and  testimony  on  the  other.  A  proper  audit 
reviews  both  the  plan  and  the  method  of  the  society,  and 
also  its  practical  operations. 

An  association,  properly  organized  and  properly 
operated,  is  like  a  complicated  piece  of  machinery,   in 

[2461 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

which  each  part  is  nicely  adjusted  to  fit  into  its  cor- 
responding parts,  so  that  all  work  together  in  a  perfect 
co-ordination,  with  the  least  friction,  and  with  economy 
of  power,  and  reach  the  highest  productive  or  executive 
possibility.  Only  a  regular  systematic  audit  will  keep  the 
machinery  of  an  association  in  good  form  and  perfect 
running  order.  If  an  audit  has  no  other  effect  than  to 
cause  an  association  to  keep  up  proper  appearances,  it 
fulfills  an  important  function.  The  audit  takes  the  affairs 
of  the  society  as  it  finds  them  and  compares  them  with 
what  they  would  be  if  ideally  perfect,  and  thus  furnishes 
a  test  of  the  actual  status  of  the  organization  and  a  cor- 
responding gauge  of  its  usefulness  and  its  title  to 
confidence. 

Formulated  somewhat  specifically,  the  principal  rea- 
sons why  the  accounts  of  an  association  should  be  audited 
regularly  and  carefully  are  as  follows : 

1.  For  the  protection  of  the  business  of  the  associa- 
tion as  a  corporate  body. 

2.  For  the  protection  of  the  individual  members,  both 
creditors  and  borrowers. 

3.  To  determine  that  the  business  is  conducted  ac- 
cording to  statutory  requirements,  and  also  in  harmony 
with  the  provisions  of  the  constitution  of  the  association. 

4.  For  the  purpose  of  determining  whether  the  busi- 
ness of  the  association  is  conducted  economically  and 
according  to  the  most  approved  and  best  labor-saving 
systems. 

5.  For  the  purpose  of  having  available  at  all  times 
and  for  any  purpose  a  verified  and  reliable  statement  of 
the  association's  affairs. 

6.  To  elevate  and  maintain  the  standing  of  the  asso- 
ciation as  one  of  the  competitive  financial  institutions  of 

[247] 


CHAPTER  XVIII. 

the  community,  and  to  supply  the  necessary  evidence  of 
its  safety  and  prosperity  to  all  persons  who  would  make 
desirable  members. 

Protection  of  Cor{>orate  Interests. 

Practically  an  association  is  a  business  partnership. 
Each  member  commits  his  capital  to  it  as  he  pays  in  his 
regular  installments.  This  capital,  in  its  aggregate 
interest,  is  risked  in  the  transactions  of  the  association. 
It  must  be  guarded,  not  only  from  thieves  who  would 
break  through  and  steal,  but  from  speculative  risks  and 
embezzlement.  It  must  be  directed  into  the  channels  for 
which  it  is  intended.  It  must  be  so  handled  as  to  make 
it  productive  in  the  highest  possible  legitimate  degree.  It 
must  have  all  the  care,  and  the  same  kind  of  care  neces- 
sary in  the  management  of  any  purely  individual  or 
private  interest. 

The  association's  prosperity  is  dependent  upon  the 
confidence  and  the  co-operation  of  its  own  members.  It 
deals  only  with  members.  The  officers  must  not  only  be 
capable  and  trustworthy,  but  must  so  keep  the  records  and 
accounts  that  the  actual  financial  condition  of  the  associa- 
tion and  the  results  of  its  business  operations  may  be  at 
any  time  readily  and  correctly  ascertained.  When  the 
accounts  are  kept  correctly  and  stand  the  test  of  a  careful 
audit,  the  members  are  enabled  to  judge  as  to  the  safety 
and  the  profit  of  their  investments.  Any  irregularity  of 
management  will  be  discovered  before  it  reaches  such 
proportions  as  to  jeopardize  the  stability  or  the  solvency 
of  the  association. 

Protection  of  Members. 

Members  of  an  association  entrust  their  surplus  earn- 
ings to  it  in  order  to  save  them.  If  it  were  not  for  this 
purpose  of  saving  they  would  have  no  use  for  the  associa- 

[248] 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

tion.  When  a  properly  verified  balance  sheet  is  pre- 
sented, showing  that  the  money  actually  saved  is  safe, 
and  is,  moreover,  so  invested  that  it  is  earning  some- 
thing, and  that  there  are  no  actual  or  prospective  losses, 
deficiencies,  bad  debts,  defalcations,  etc.,  then  the  mem- 
bers know  that  they  have  taken  all  necessary  precautions 
to  protect  and  to  conserve  their  interests.  They  know- 
also  that  by  the  methods  the  officers  have  adopted  and  by 
the  system  of  auditing  which  has  been  inaugurated,  they 
are  able  to  discover  any  leakage  before  it  reaches  such 
proportions  as  to  endanger  their  money. 

As  remarked  in  another  place,  a  practical  system  of 
auditing  is  indispensable  when  the  affairs  of  an  associa- 
tion are  prosperous.  It  is  all  the  more  necessary  when 
this  is  not  the  case.  Any  lack  of  prosperity  is  thus  dis- 
covered promptly,  and  immediate  steps  may  be  taken  to 
improve  the  situation,  if  this  be  possible.  If  this  cannot 
be  done,  members  will  know  what  to  expect,  and  will  not 
be  disappointed  at  low  dividends  or  no  dividends.  If  the 
situation  is  so  bad  as  to  make  it  necessary,  arrangements 
may  be  made  to  wind  up  the  aflfairs  of  the  association 
before  they  reach  such  a  condition  as  to  involve  seriously 
the  interests  of  the  members. 

Occasionally,  an  association  is  allowed  to  drag  along 
feebly  after  it  has  become  apparent  that  it  is  not  prosper- 
ing, until  it  reaches  a  condition  when  it  is  impossible  to 
wind  it  up  without  serious  loss.  Such  a  case  may  arise 
from  outside  circumstances,  local  or  otherwise,  as  well  as 
from  mismanagement  or  inattention  on  the  part  of  the 
officers.  Many  circumstances,  such  as  the  removal  of 
factories,  the  dejjreciation  of  real  estate,  and  similar 
things,  may  change  the  conditions  under  which  an  asso- 
ciation was  established.  It  is  always  best  to  know  the 
worst  at  once  and  to  act  accordingly.  When  losses 
accumulate  until  a  crash  comes,  it  is  nearly  always  found 

1249) 


CHAPTER  XVIII. 

that  the  assets  are  less  in  value  than  they  are  supposed  to 
be.  In  addition,  the  cost  of  winding  up  is  so  greatly  in- 
creased that  this  of  itself  very  materially  reduces  the 
assets.  This  is  a  condition  that  should  never  be  per- 
mitted to  arise,  and  one  that  is  practically  impossible 
under  any  proper  system  of  auditing. 

Statutory  and  Constitutional  Requirements. 

The  business  of  building  associations  has  grown  to 
such  proportions  that  it  has  become  one  of  the  important 
factors  in  the  financial  transactions  of  the  country.  In 
few  other  connections  are  the  personal  property  interests 
of  a  larger  number  of  citizens  involved.  There  is  this 
other  consideration  also,  that  the  number  of  citizens  who 
entrust  their  saving  to  the  care  of  associations  is  likely 
to  continue  to  increase  at  a  very  rapid  rate.  Very  prop- 
erly, therefore,  the  legislatures  in  the  different  states 
give  the  subject  attention  from  time  to  time,  and  provide 
by  statute  the  limitations  and  the  methods  to  be  observed 
by  the  associations. 

These  corporations,  in  order  for  their  own  guidance, 
establish,  under  the  statutes  of  the  state,  certain  rules 
and  regulations,  which  they  embody  in  their  constitutions 
and  by-laws.  These  rules  determine  the  methods  and  the 
restrictions  of  their  operations.  Upon  the  faithful  observ- 
ance of  these  depend  the  safety  and  the  prosperity  of  the 
associations  and  the  protection  of  the  deposits  made  by 
shareholders. 

In  a  sense,  therefore,  it  is  the  business  of  an  auditor 
to  inspect  as  well  as  to  audit.  Not  only  should  he  com- 
pare and  check  items,  verify  entries  and  footings,  etc.,  and 
test  all  the  details  of  the  accounting  and  the  book-keeping, 
but  he  should  inspect  the  methods  upon  which  the  system 
of  accounting  is  based,  and  the  ends  it  aims  at.  He 
should  furthermore,  satisfy  himself  that  both  the  account- 

1250] 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

ing  and  the  operations  of  the  associations  are  in  accor- 
dance with  the  constitution  and  the  by-laws;  and  in 
addition  to  this,  that  the  rules  themselves  of  the  associa- 
tion are  in  harmony  with  the  statutes  of  the  state.  It  is 
only  by  this  system  of  far-reaching  and  thorough  audit- 
ing that  an  auditor  can  render  a  faithful  report  to  those 
who  have  trusted  their  interests  for  the  time  being  to  his 
guardianship. 

Economical,  Lahor-Saving,  and  Simple  l^etKods. 

People  desire  economy  and  simplicity  in  the  manage- 
ment of  their  business.  They  do  not  want  an  unneces- 
sary expenditure  of  money,  nor  a  cumbersome  system 
which  they  cannot  understand.  They  like  to  see  econom- 
ical and  labor-saving  methods  adopted  in  the  manage- 
ment of  the  business  of  their  associations,  and  all  super- 
fluous work  and  intricate  books  dispensed  wuth.  They 
like  to  have  accounts  in  such  form  that  they  themselves 
can  readily  understand  them  and  thus  perceive  how  they 
are  kept.  Experience  has  shown  that  the  weakness  of 
many  associations  which  have  failed  has  been  just  here. 
There  was  a  waste  of  money  in  the  manner  in  which  the 
business  was  conducted.  Much  unnecessary  work  was 
required,  and  the  system  followed  was  so  intricate  and 
cumbersome  that  it  was  not  readily  understood,  and  it 
did  not  give  a  plain  showing  of  the  affairs  of  the  asso- 
ciation. Consequently,  an  association  would  become  in- 
volved before  its  real  condition  was  discovered. 

Proper  auditing,  by  those  expert  in  such  matters, 
would  quickly  detect  any  such  condition  as  this  and  put 
an  end  to  it. 

The  Balance  Sheet. 

The  best  method  of  securing  this  condition  is  to  have 
thoroughly  efficient  auditors,  appointed  by  the  state,  or 
appointed   by   and   responsible   to   the   stockholders   and 


CHAPTER  XVIII. 

directors  of  tlie  association,  to  examine  the  records,  and 
to  report  to  the  association  the  manner  in  which  accounts 
have  been  kept;  to  verify  the  balance  sheet,  and  to  be 
able  to  state  that  in  this  the  secretary  and  the  directors 
have  shown  correctly  the  business  for  the  period  covered ; 
and  that  it  is  a  true  exhibit  of  the  condition  of  the  asso- 
ciation upon  the  date  of  its  issue.  Such  a  statement  thus 
verified  enables  the  members  to  act  with  intelligence  and 
confidence,  and  also  gives  to  outsiders  who  may  wish  to 
become  members,  or  who  may  have  some  other  interest, 
full  and  trustworthy  information.  If  an  association  is 
prosperous  a  correct  balance  sheet  is  its  best  advertise- 
ment. If  it  is  not  ])rosperous  the  balance  sheet  should 
all  the  more  demonstrate  the  fact  in  order  that  the  mem- 
bers may  be  fully  warned. 

In  this  connection  it  may  be  remarked  in  passing  that 
such  methods  of  book-keeping  have  now  been  devised  for 
associations  that  the  secretary's  accounts  may  exhibit  a 
continuous  balance  sheet,  showing  at  any  moment  the 
exact  condition  of  the  association's  business. 

The  Auditor,  the  Representative  of  the  Members. 

The  first  point  to  make  distinct  is  that  an  auditor  does 
his  work  in  the  interest  of  the  members  as  contra-distin- 
guished from  the  officers  of  an  association,  and  that 
therefore  he  is  their  representative.  He  knows  nothing 
of  and  cares  nothing,  for  the  time  being,  about  the  officers 
whose  accounts  he  is  examining.  He  is  appointed  for 
the  purpose  of  ascertaining  on  behalf  of  the  stockholders 
that  their  money  has  been  properly  accounted  for;  that 
such  of  the  funds  as  have  been  expended  have  been  ap- 
plied in  the  manner  intended  and  as  indicated  in  the 
accounts ;  and  that  the  unexpended  portion  is  invested  or 
held  as  intended,  and  that  this  is  shown  in  the  report  and 
the  balance  sheet. 

12521 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

In  a  general  way  he  is  to  give  to  the  co-partners  or 
shareholders  his  assurance  that  the  transactions  of  the 
officers  and  the  directors  in  the  management  of  the  busi- 
ness of  the  association  has  been  wise  and  discreet,  and 
according  to  the  rules  and  the  purposes  of  the  associa- 
tion; that  the  report  and  the  statement  which  they  pre- 
sent correctly  and  accurately  represent  the  actual  trans- 
actions and  condition  of  the  assoiJiation ;  that  it  may  be 
relied  upon  as  showing  the  real  result  of  their  manage- 
ment, and,  that  the  balance  sheet  presents  the  actual  re- 
ceipts and  expenditures,  costs  and  gains,  and  liabilities 
and  assets,  for  the  term  it  covers. 

For  the  time  being  the  auditor  is  the  critic,  the  judge, 
of  the  officers, — their  friend  and  ally  if  their  accounts  are 
correct  and  their  conduct  right,  their  uncompromising 
antagonist  if  they  are  guilty  of  any  shortcoming  or 
wrongdoing. 

The  Selection  of  an  Auditing  Committee. 

Determining  who  shall  be  the  auditor  or  auditing  com- 
mittee is  a  very  important  matter.  In  mOst  associations, 
that  is  to  say  in  associations  that  have  not  long  been 
organized,  the  auditors  are  usually  three  or  five  members 
selected  by  the  membership  at  large,  or  by  the  directors, 
for  this  purpose.  In  the  older  associations,  and  in  not  a 
few  of  the  younger  ones,  a  single  auditor  is  chosen  who, 
as  a  rule,  is  a  professional  accountant,  and  may  or  may 
not  be  a  member.  Other  things  being  equal,  it  is  better 
that  he  should  not  be  a  member  of  the  association,  since 
thus  he  may  be  supposed  to  be  wholly  di.sinterested.  It 
will  be  for  each  a.ssociation  to  determine  for  itself, 
whether  the  auditing  shall  be  by  a  committee  of  members 
or  by  the  employment  of  a  special  auditor  or  professional 
accountant. 


CHAPTER  XVIII. 

Qualifications  for  Auditing. 

Whether  the  audit  be  by  a  single  individual,  or  by 
a  committee,  the  qualifications  must  be  the  same.  If  by 
an  individual,  he  must  jx^sscss  all  the  qualifications  him- 
self; if  by  a  committee,  one  niembcr  may  be  versed  in  one 
part  of  their  work,  and  another  skilled  in  some  other 
department.  For  convenience  in  presenting  the  subject, 
and  in  order  to  make  it  a  little  more  pointed  and  specific, 
we  will  treat  the  auditor  in  the  singular  number,  and  will 
sj^eak  of  the  qualifications  necessary  to  any  individual 
who  should  be  regarded  as  comi^etent  for  such  a  task. 

The  auditor's  duties  begin  immediately  with  the  books 
and  the  accounts  of  an  association.  These  must  be  placed 
in  his  hands,  posted  and  balanced  up  to  date,  including 
the  last  meeting  for  the  term  over  which  his  duty  is  to 
extend.  The  mistake  should  not  be  made  that  he  is  to 
take  the  books  and  accounts  of  an  association  and  put 
them  into  proper  shai)e,  if  he  does  not  find  them  so.  He 
has  nothing  to  do  with  this,  unless  he  is  employed  to 
correct  as  well  as  to  audit  the  books.  He  is  to  take  them 
just  as  he  finds  them  and  to  report  upon  them  as  they  are. 

While  an  auditor  must  be  a  book-keeper,  auditing  is 
not  book-keeping.  Frequently  it  happens  that  an  audit- 
ing committee  sets  to  work  to  straighten  up  the  books  and 
the  accounts  of  an  association  preliminary  to  their  audit- 
ing and  checking.  Keeping  the  accounts  belongs  wholly 
to  the  officers  of  the  association,  and  it  is  the  business  of 
the  auditor  to  report  upon  things  exactly  as  he  finds  them 
without  mending  or  altering  them  in  any  way.  He  is 
the  representative  of  the  shareholders  and  membership 
at  large,  and  not  an  assistant  of  the  secretary  and  other 
officers.  It  is  his  business  to  criticise  and  find  fault — if 
criticism  is  warranted — with  the  work  of  the  secretary 
and  the  officers  as  shown  in  their  books  and  reports,  and 
not  to  correct  and  cover  up  their  faults  and  shortcomings. 

[2541 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

Not  only  must  an  auditor  have  a  thorough  knowledge 
of  accounts  generally,  but  he  must  be  an  expert  in  asso- 
ciation accounts.  The  first  principles  of  accounting  are 
the  same  always  and  everywhere;  but  in  each  particular 
line  of  business  the  application  of  the  first  principles  must 
vary.  Consequently,  one  may  be  an  expert  bank  account- 
ant but  not  posted  in  insurance  accounting,  or  in  manu- 
facturing or  in  merchandising.  Building  association 
accounts  have  their  own  distinct  pecularities,  and  present 
certain  features  of  accounting  not  found  in  other  lines  of 
business.  The  best  auditor  of  building  association  ac- 
counts therefore  must  be  a  specialist  in  this  particular  line. 

Again,  there  is  progress  in  the  science  and  art  of 
accounting  as  in  all  other  sciences  and  arts.  Methods 
formerly  in  general  use  are  now  discarded  for  those 
which  are  better.  In  every  line  of  business  labor-saving 
systems  have  been  introduced  which  not  only  make  econ- 
omy in  time  and  expense  possible,  but  also  greatly  sim- 
plify the  plans  and  make  the  results  more  readily  attain- 
able and  comprehensible.  There  are  many  devices  now 
in  common  use  which  facilitate  and  expedite  the  work  of 
an  accountant.  An  auditor  should  not  be  an  old  fogy. 
He  should  be  up  with  the  times  and  have  a  full  knowledge 
of  modern  methods  and  improvements  and  all  labor  and 
time-saving  devices.  He  should  have  a  quick  grasp  of 
things,  so  that  he  can  see  at  once  the  correlation  of  all  the 
affairs  of  the  association,  and  also  the  relations  which 
each  separate  account  or  item  bears  to  the  whole. 

Not  only  must  he  be  an  expert  accountant,  but  he  must 
understand  the  philosophy  and  the  principles  of  the  line 
of  business  with  which  he  is  dealing.  A  building  associa- 
tion is  the  application  of  the  principles  of  co-operation  to 
business  matters.  The  business  of  an  association  differs 
from  that  of  an  individual,  or  of  an  ordinary  business 
firm,  in  the  fact  that  the  private  interests  of  so  many 

1 265  J 


CHAPTER  XVIII. 

more  individuals  are  involved.  This  introduces  the  ele- 
ments, or  principles  of  c.o-oi>eration.  In  order  to  see  that 
these  are  correctly  applied  and  carried  out  it  is  necessary 
that  the  auditor  shall  himself  be  well  informed  in  regard 
to  the  princij)les  which  underlie  co-oi>eration  in  general, 
and  co-operation  in  this  si>ecial  direction  in  particular. 

It  hardly  seems  necessary  to  say  that  an  auditor  must 
be  honest  and  incorruptible.  His  intentions  and  purposes 
must  be  absolutely  correct  on  the  one  hand,  and  on  the 
other  he  must  not  l>e  susceptible  to  any  kind  of  influence 
that  might  lead  him  avvay  from  such  purposes.  Any  such 
influence  as  deliberate  attempts  at  bribery  are  hardly  to  be 
expected  in  such  an  institution  as  a  building  association, 
but  there  might  be  the  influence  of  friendship,  or  sym- 
pathy, or  something  of  that  kind,  which  would  tend  to 
swerve  an  auditor  from  a  straight  line.  These  must  be 
guarded  against,  not  only,  on  the  part  of  the  members  in 
the  selection  of  the  auditor,  but  on  the  part  of  the  auditor 
himself  in  the  prosecution  of  his  work. 

An  auditor  must  be  courageous  and  firm.  He  may  find 
himself  antagonized  and  opposed.  He  may  find  opposi- 
tion where  he  expected  co-operation.  He  may  find  weak- 
ness where  he  expected  strength.  He  may  be  placed  under 
a  variety  of  circumstances  which  make  it  difficult  for  him 
faithfully  to  prosecute  his  vyork.  His  courage  and  firm- 
ness must  never  fail. 

He  must  be  a  discreet  man,  one  capable  of  keeping  his 
own  counsel,  going  his  own  way,  minding  his  own  busi- 
ness, and  reaching  his  own  conclusions. 

He  must  be  a  man  of  tact  and  courtesy,  having  the 
faculty  of  finding  out  what  he  wants  to  know,  of  winning 
the  esteem  and  confidence  of  those  with  whom  he  is 
brought  into  contact,  and  of  commanding  the  respect  even 
of  those  whose  shortcomings  or  faults  he  may  be  called 
upon  to  expose. 

[2S6] 


AUDITIxNG:  ITS  NECESSITY  AND  OBJECT. 

Withal  he  must  be  a  man  of  moderation  and  forbear- 
ance, not  hasty  to  reach  conclusions,  not  disposed  to  take 
any  improper  advantage  of  his  position  or  knowledge, 
and  not  inclined  to  be  dictatorial  or  overbearing  in  his 
manners  in  any  respect. 

Disqualification  of  Auditors. 

That  a  proper  system  of  auditing  does  much  to  estab- 
lish confidence  in  an  association  has  been  proven  beyond 
doubt.  The  shareholders  should  bear  in  mind  that  it  lies 
in  their  power  to  increase  the  advantages  of  auditing  to 
the  maximum  by  a  judicious  selection  of  auditors  and  the 
adoption  of  the  best  methods  as  to  the  time,  manner, 
frequency,  etc.,  of  making  the  audits.  A  man  may  be  a 
good  penman  or  copyist,  or  may  be  reliable  in  the  addi- 
tion of  columns  of  figures  or  in  multiplication,  etc.,  he 
may  be  successful  as  a  mechanical  or  routine  book-keeper, 
and  still  be  wholly  incompetent  as  an  auditor.  To  be 
capable  of  making  an  audit,  he  must  have  a  thorough 
comprehension  of  what  the  figures  and  the  items  he  has 
to  inspect  mean,  and  must  understand  their  philosophical, 
as  well  as  their  mathematical  relations.  A  scheming 
ofticial  might  easily  keep  a  book-keeper's  clerk  or  assistant 
in  a  good  humor  with  himself  by  giving  him  plenty  of 
mechanical  work  to  do,  checking  this  and  that,  adding 
and  subtracting  here,  and  multiplying  there,  all  of  which 
would  lead  to  nothing  at  all,  but  would  leave  the  auditor 
(?)  with  the  impression  that  he  was  making  a  very 
thorough  audit.  By  thus  flattering  his  vanity,  and  enab- 
ling him  to  make  a  great  show  of  his  work,  he  could  be 
effectually  thrown  off  any  dangerous  scent,  and,  while 
indu.striously  calling  ofiF  and  checking  items  and  details, 
the  footprints  of  fraud  could  be  entirely  covered  up. 
Indeed,  he  might  in  this  way  handle  the  very  item  which 

1257] 


CHAPTER  XVIII. 

covers  or  omits  fraudulent  transactions.  He  would  be  so 
taken  up  with  the  meciianical  part  of  his  work  that  he 
would  never  discover  anything. 

Assistance  from.  Officials. 

An  auditor  who  cannot  audit  without  the  assistance  of 
the  secretary  is  not  the  man  for  the  place.  It  is  not  an 
uncommon  occurrence  to  see  a  secretary  busily  engaged  in 
assisting  an  auditor  by  reading  out  from  pencil  memoran- 
da in  his  ledger  the  amounts  which  are  to  be  checked  in 
the  pass-books,  and  then  these  pencil  figures  on  the  ledger 
are  erased  before  the  ledger  is  presented  to  the  auditor  for 
other  purposes.  An  auditor  who  must  be  assisted  is  one 
to  be  avoided. 

After  the  books  have  been  placed  in  his  hands  and 
explanations  have  been  made  of  the  system  which  is  fol- 
lowed, and  matters  have  thus  been  formally  turned  over 
to  him,  an  auditor  should  take  full  charge  and  set  about 
his  work  without  the  presence  of  any  of  the  officials  un- 
less he  shall  summon  them  to  answer  questions,  or  to 
make  necessary  explanations.  If  he  finds  new  features  in 
book-keeping  in  vogue  with  which  he  is  not  familiar  he 
should  frankly  say  so,  and  ask  questions  freely  until  he 
understands  the  system.  He  cannot  make  his  audit  with- 
out having  this  knowledge,  and  it  is  due  to  the  officials, 
to  the  shareholders  whose  interest  he  represents,  and  to 
himself,  that  he  secure  the  information.  This  having  been 
secured,  he  is  then  able  to  understand  everything  clearly, 
and  to  report  upon  it  correctly,  and  should  proceed  to  do 
his  own  work  in  his  own  way. 

Change  of  Auditors. 

It  may  be  desirable,  as  a  precaution,  or  for  other 
reasons,  to  make  a  change  of  auditors  from  time  to  time; 
but  no  change  should  be  made  for  the  mere  sake  of  a 

[258] 


AUDITING:  ITS  NECESSITY  AND  OBJECT. 

change.  An  auditor  who  has  once  gone  over  the  accounts 
of  an  association  has  acquired  a  famiHarity  with  them, 
that  is  to  say  a  special  knowledge  of  them,  which  would 
be  valuable  to  him  in  making  a  second  audit.  If  he  is 
efficient  and  satisfactory,  and  there  is  no  special  reason 
for  making  a  change,  it  will  be  desirable  to  continue  him 
in  the  position.  If  the  books  are  audited  by  a  committee 
it  will  be  easy  to  keep  an  old  hand  in  the  lead  with  new 
assistants  from  time  to  time.  There  is  often  a  risk  in 
placing  the  matter  of  auditing  in  new  hands  from  the 
fact  that  it  may  not  be  possible  to  know  with  certainty 
that  the  new  hands  are  competent  ones.  On  this  account 
it  is  better  never,  if  it  can  be  avoided,  to  place  an  audit  in 
wholly  untried  hands.  There  may  be  natural  incapacity, 
or  a  lack  of  training,  which  will  make  the  work  unreliable 
and  unsatisfactory. 

Compensation  of  Auditors. 

There  is  no  more  important  work  to  be  done  for  an 
association  than  the  auditor's.  In  order  that  it  may  be 
done  properly  the  very  best  talent  available  should  be 
obtained  for  it.  It  is  very  poor  policy  for  share-holders 
to  seek  the  cheapest  auditors.  One  employed  for  this 
purpose  should  be  made  to  feel  that  he  is  well  paid  for 
his  services.  Being  free  and  satisfied  on  this  score,  he  is 
thereby  inspired  to  more  faithful  service  than  he  might 
otherwise  render.  It  is  especially  unfair  for  shareholders 
to  expect  any  of  their  fellow-members  to  give  their  expert 
knowledge  and  their  time  to  this  painstaking  and  labori- 
ous work  without  fair  remuneration.  In  estimating  the 
value  of  an  auditor's  service  it  is  not  so  much  the  amount 
of  time  that  he  gives  to  it  that  should  be  considered, — 
although  this  should  not  be  ignored, — as  the  fact  that  his 
work  is  in  the  nature  of  professional  services,  and  should 
be  paid  for  according  to  its  professional  value. 

[269J 


CHAPTER  XIX. 

Auditing:  Its  Methods. 

Uniformity  Im^ossihle. 

In  the  preceding-  chapter  the  subject  of  auditing  has 
been  discussed  in  relation  to  its  general  principles  and 
features.  But,  in  order  that  the  suggestions  of  this  work 
may  be  made  of  as  much  practical  value  as  possible,  it  is 
necessary  to  indicate,  as  far  as  may  be,  how  these  princi- 
ples are  to  be  applied  in  practice.  Every  one  will  under- 
stand that  it  is  impossible  to  lay,  down  a  set  of  specific 
rules  which  will  apply  in  all  cases.  It  is  only  the  applica- 
tion of  the  principles  of  auditing  in  a  general  way  that 
can  be  pointed  out  here.  These  must  be  adapted  to  cir- 
cumstances as  they  may  be  found  to  exist  wherever  they 
come  to  be  specifically  applied.  Even  in  any  one  particu- 
lar association,  circumstances  differ  from  time  to  time  as 
new  contingencies  arise.  Consequently  there  must  be 
more  or  less  variation  in  the  application  of  any  set  of 
rules.  While  the  rules  and  suggestions  which  follow  are 
given  in  outline,  the  endeavor  has  been  made  to  make 
them  sufficiently  comprehensive  to  cover  almost  any  set 
of  circumstances  that  may  arise  in  the  practical  operations 
of  an  association. 

Care  of  Books. 

An  auditor  should  notice  whether  or  not  the  books  of 
an  association  are  well  cared  for.  He  should  see  where 
they  are  kept  and  how  they  are  handled,  should  notice 
whether  or  not  they  are  in  good  condition,  and  are  clean. 

[260] 


AUDITING:  ITS  METHODS. 

He,  himself,  in  turn  should  handle  them  carefully,  keep- 
ing them  neat  and  clean,  and  placing  upon  them  only  the 
necessary  check  marks,  and  should  make  these  as  small 
and  as  neat  as  possible.  Auditors  will  find  that  books 
which  are  neat  and  clean  in  appearance,  in  which  the 
entries  are  tastefully  made,  balances  properly  ruled  off, 
etc.,  will  as  a  rule  contain  accounts  that  are  correctly  kept. 
Where  the  condition  of  the  books  is  such  as  to  indicate 
carelessness  in  their  handling,  an  auditor  may  well  expect 
to  find  carelessness  in  the  accounts  themselves,  for,  care- 
less in  one  thing  careless  in  all  things,  may  be  expected  to 
be  the  rule.  If  the  secretary  or  other  officer  is  neglectful 
of  his  duties,  or  has  erasures  and  finger-marks  all  through 
his  books,  he  is  likely  to  have  errors,  both  of  omission  and 
commission,  in  his  entries. 

Special  Hints. 

A  list  of  the  books  in  use  having  been  furnished  to  the 
auditor  he  should  make  it  his  first  business  to  see  that  it 
is  complete,  and  that  all  the  books  named  in  it  are  in  his 
hands.  He  should  next  turn  his  attention  to  the  general 
features  and  conditions  of  the  books  themselves.  He 
should  see  whether  they  con.stitute  a  perfect  system  with- 
out any  breaks;  that  is,  whether  the  books  are  like  the 
different  parts  of  a  machine,  each  wheel  fitting  properly 
into  the  others,  and  no  wheel  absent.  He  should  ex- 
amine each  book  and  note  all  the  particulars  concerning 
it.  For  instance,  he  should  see  if  the  books  are  machine- 
paged,  since  this  is  one  of  the  most  efficient  safeguards 
against  tampering  such  as  cutting  out  or  pasting  together 
of  leaves,  and  so  on.  and  is  a  most  important  feature  in 
the  tracing  of  entries. 

All  books  which  in  any  way  have  connection  with 
financial  transactions  in  the  receipt  or  expenditure  of 
money  shr)uld  be  numbered   in   consecutive  pages  by  a 

I2G1) 

18 


CHAPTER  XIX. 

machine.  Tliey  should  beg'in  with  page  i,  and  should 
continue  in  regular  numerical  order.  It  sometimes  hap- 
pens that  books  become  very  large,  and  the  page  num- 
bers become  too  large  for  convenience  in  practical  work. 
Various  expedients  may  be  resorted  to  in  such  cases.  The 
first  series  of  pages  may  run  up  to  i,ooo.  Then  a  new 
series  may  begin  which  will  be  called  A,  as  A  i,  A  2,  A  3, 
and  so  on,  while  a  third  series  may  be  B  i,  B  2,  B  3,  and 
so  on. 

Attention  should  be  given  next  to  the  clerical  work  in 
the  books  to  see  whether  all  entries  have  been  made, 
whether  they  are  clear  and  legible,  and  whether  the  exten- 
sions and  footings  have  been  carried  out.  If  omissions 
are  discovered  the  attention  of  the  ofificers  shoud  be  called 
to  them,  and  the  officers  themselves  should  fill  them  up. 
If  entries  are  found  which  are  not  in  due  form,  but  are  in 
the  nature  of  memoranda,  this  should  be  noted,  and,  if 
necessary  the  officials  should  be  called  upon  to  complete 
their  work.  If  any  entries  are  made  in  pencil,  or  footings 
appear  in  pencil,  the  pencil  work  should  not  be  accepted, 
because  after  the  audit  is  completed,  such  entries  could  be 
easily  changed.  The  original  rulings  of  the  books,  and 
also  all  rulings  made  in  the  course  of  the  accounts  should 
be  noted.  If  these  rulings  do  not  fulfill  their  purpose 
clearly  the  fact  should  be  noted  and  the  matter  properly 
cleared  up. 

These  preliminary  matters  having  been  noted,  the 
auditor  should  next  turn  his  attention  to  the  particular 
accounts.  He  should  first  notice  the  method,  or  modus 
operandi,  upon  which  the  accounts  are  kept.  He  then 
should  test  the  different  accounts  by  taking  certain  items 
and  tracing  them  from  book  to  book  so  as  to  obtain  a 
clear  knowledge  of  the  process  by  which  the  accounts  are 
made  up. 

[262] 


AUDITING:  ITS  METHODS. 

As  the  auditor  proceeds  with  his  work  various  inci- 
dental matters  will  continually  arise  to  claim  his  atten- 
tion. He  must  be  prepared  by  intelligence  and  experi- 
ence to  look  out  for  these  himself.  They  can  not  be 
specifically  scheduled.  A  few  such  matters  may  be  men- 
tioned particularly  by  way  of  suggestion. 

He  should  see  that  no  dividends  have  been  declared  out 
of  the  capital,  or  out  of  earnings  which  have  not  yet  been 
realized. 

He  should  see  whether  or  not  any  capital  has  been 
invested  in  securities  that  are  illegal  or  improper,  and 
false  assets  shown  in  this  way. 

He  should  inquire  as  to  whether  the  constitution  and 
the  rules  have  been  followed  in  all  matters  relating  to  the 
accounts,  and,  if  the  directors  are  empowered  with 
authority  to  use  their  discretion  in  any  official  transac- 
tions, whether  or  not  their  resolutions  and  instructions 
have  been  carried  out  to  the  letter. 

He  should  see  that  rebates  in  interest  are  allowed  cor- 
rectly, and  all  incidental  items  are  properly  entered  and 
considered. 

He  should  examine  carefully  the  profit  and  loss  ac- 
count, inspecting  and  verifying  each  item.  He  should  see, 
for  instance,  that  any  provision  in  the  rules  permitting 
allowance  for  depreciation  in  the  value  of  fixtures,  sta- 
tionery, etc.,  has  been  followed,  and  that  such  entries  are 
properly  made. 

Every  auditor  should  have  a  system  of  check  marks  of 
his  own.  These  should  be  made  with  ink  or  an  ink  pencil. 
They  may  be  in  different  colors  and  in  different  forms  as 
he  may  find  necessary  for  the  perfection  of  his  work.  By 
putting  his  prf)i)er  check  on  each  item  as  he  passes  ui)on  it 
he  will  not  fall  into  confusion,  and  each  item  will  tell  its 
own  story  as  soon  as  he  looks  at  it.  lie  will  also  know 
in  this  way  when  his  work  is  completed,  and  his  check 

[263] 


CHAPTER  XIX. 

marks  will  retiiain  for  the  inforniaticm  and  guidance  of 
himself  or  others  in  making  future  audits. 

False  Accounts. 

It  is  tiie  auditor's  business  to  detect  mistakes  and  mis- 
representations. Mistakes  occur  through  inefficiency  or 
carelessness.  jMisrejire.sentations  arise  from  an  intention 
to  deceive.  Mistakes  may  be  rectified;  misrepresentations 
must  be  exposed.  In  case,  therefore,  the  secretary  or  the 
board  of  directors  have  intentionally  prepared  and  sub- 
mitted a  false  statement,  the  auditor  may  have  a  more  or 
less  unpleasant  and  sometimes  difficult  task  before  him. 
If  he  is  efficient,  he  will  soon  be  able  to  detect  the  fact 
that  the  account  is  incorrect.  If  it  has  been  made  so  in- 
tentionally, he  will  soon  discover  this  also.  Being  prop- 
erly put  upon  his  guard  by  his  discovery,  he  will  need  to 
summon  all  his  tact  and  firmness,  and  settle  down  to  a 
faithful  and  thorough  investigation. 

He  must  now  prepare  himself  not  only  to  point  out 
the  errors  in  the  account  but  also  to  expose  the  purpose 
and  method  of  the  errors.  It  will  always  be  well  for  an 
auditor  under  such  circumstances  to  be  cool,  deliberate, 
and  close-mouthed.  He  should  not  be  hasty  to  betray  his 
suspicions.  There  should  be  nothing  in  his  manner,  or 
speech,  or  actions,  to  indicate  that  suspicions  have  been 
aroused,  until  the  proper  time  comes  for  him  to  take 
decisive  action.  He  should  fortify  himself  with  all  the 
evidence  available,  so  that  his  position  may  be  impregna- 
ble, and  that,  when  exposure  comes,  it  may  be  thorough 
and  complete,  and  the  guilty  officials  brought  to  punish- 
ment and  restitution  made. 

Errors  of  Omisaion, 

It  is  difficult  to  lay  down  any  rule  by  which  errors 
of   this  kind   can   be   detected   with    absolute   certainty. 

[264] 


AUDITING:  ITS  METHODS. 

Everything  will  depend  upon  the  intelligence,  the  experi- 
ence, and  the  determination  of  the  auditor.  An  audit 
may  be  thorough  and  correct  as  far  as  direct  cash  transac- 
tions are  concerned,  but  may  be  incomplete  in  the  state- 
ment of  assets  and  liabilities.  To  guard  against  errors 
of  omission  in  any  part  of  the  accounts,  each  item  should 
be  checked  as  far  as  possible  from  original  entries  or 
sources  in  order  to  see  that  the  association  has  been 
charged  with  all  cash  received  and  liabilities  incurred. 
The  same  course  must  be  pursued  on  the  other  hand  with 
reference  to  all  cash  expenditures  and  to  all  credits.  It 
sometimes  happens  that  the  affairs  of  associations  become 
complicated  and  the  interests  of  stock-holders  seriously 
endangered  without  warning,  because  officials  have  been 
careless  in  their  accounts  in  these  respects,  and  auditors 
have  been  incompetent  or  negligent.  It  should  always  be 
borne  in  mind  that  an  auditor  is  one  who  audits,  and 
if  he  fails  in  any  particular  then  he  is  not  entitled  to  the 
official  name  which  he  bears. 

1.  Check  all  extensions  and  footings  in  the  original 
books. 

2.  Compare  each  entry  in  No.  i,  Members'  Pass- 
Book,  with  No.  2,  Contribution  Book,  and  No.  4,  Mem- 
bers' Ledger. 

3.  Compare  each  entry  in  No.  3,  Disbursement  Book, 
with  No.  4,  Members'  Ledger. 

4.  Compare  each  entry  in  No.  2,  Contribution  Book, 
with  No.  4,  Members'  Ledger. 

5.  Compare  each  entry  in  No.  2,  Contribution  Book, 
and  No.  3,  Disbur.scment  Book,  with  No.  5,  Cash  Book. 

6.  Compare  No.  7,  Treasurer's  Receipt  Book,  with 
No.  2,  Contribution  Book,  and  also  with  No.  8,  Treas- 
urer's Cash  Book,  and  with  No.  3,  Disbursement  Book. 

7.  Comjjare  totals  of  No.  5,  Cash  Book,  with  totals 
in  No.  6,  General  Ledger. 

[265] 


CHAPTER  XIX. 

General  Outhne. 

Tlie  accompanying  diagram  illustrates  the  posting  of 
different  items  from  book  to  book  until  each  reaches  its 
final  account.  In  this  graphic  way  the  entire  system  of 
building  association  accounts  is  illustrated  at  a  glance. 
Since  an  auditor  must  follow  these  postings  the  diagram 
will  be  valuable  as  a  guide. 

Share  Contributions. 

A  few  suggestions  may  be  made  as  to  the  proper 
method  of  checking  up  the  dues  paid  in  by  the  share- 
holders : 

1.  The  members'  pass-books  should  be  examined  to 
see  that  each  has  been  issued  only  after  the  member  has 
complied  with  the  rules  for  admission,  whatever  they  may 
be,  paid  all  necessary  fees,  etc. 

2.  Pass-book  entries  of  dues,  fines,  etc.,  should  be 
checked  up  as  to  amounts  and  dates. 

3.  The  accounts  in  the  Members'  Ledger  should  be 
checked  against  the  pass-book  entries  to  see  that  all  items 
have  been  properly  posted. 

4.  The  contributions  of  each  deposit  account  in  the 
Contribution  Book  should  be  added  across,  and  the  totals 
should  be  compared  with  the  corresponding  entries  in  the 
Cash  Book. 

There  is  such  a  variety  of  methods  under  which  dues 
are  received  and  recorded  that  it  is  difficult  to  make 
specific  suggestions  that  will  cover  all  cases.  What  is 
said  above  will  be  sufificient  to  put  an  intelligent  auditor 
upon  the  right  track. 

Proving  a  Cash  Balance. 

The  cash  balance  as  shown  in  the  cash  book  and  veri- 
fied by  the  bank  book  of  the  association,  with  a  proper 
certificate  from  the  bank  and  the  auditing  committee, 

[266] 


AUDITING:  ITS  METHODS. 


w 


Contribution 
Book 

for  entering 


Recelpto. 


TreaHarer's 
B«celpt. 


DIAGRAM  h 


MEMBER'S 
PASS     BOOK. 


INDrV^IDUAL 

SHARE   HOLDER'S 

LEDGER. 


® 


CASH     BOOK. 


"® 


GENERAL     LEIKJER. 


-w 


Withdrawal 

Book 

or 

Order  Book. 


f2(;7i 


CHAPTER  XIX. 

should  go  to  their  respective  depositories  for  an  actual 
verification  of  this  account.  In  those  cases  where  moneys 
of  the  association  are  involved,  outside  of  the  bank  ac- 
count, this  should  be  verified  by  the  cash  being  produced 
and  counted.  In  case  the  audit  does  not  take  place  until 
some  time  after  the  end  of  the  term,  the  cash  on  hand 
at  the  date  of  the  audit  should  be  counted. 

A  statement  should  be  prepared  showing  receipts  and 
expenditures  since  the  close  of  the  term.  By  having 
arrangements  for  the  audit  previous  to  the  close  of  the 
term,  this  last  exi)edient  will  not  be  necessary,  and  an 
element  of  uncertainty  will  be  removed,  for  of  course, 
if  any  fraud  were  being  planned,  it  would  be  possible  to 
manipulate  the  cash  account  at  the  close  of  the  term  and 
previous  to  the  date  of  the  audit,  so  as  to  show  a  false 
balance  when  the  term  closed. 

Secretary's  Contribution  Book. 

It  is  our  purpose  to  give  illustrations  of  only  a  few 
forms  that  are  applicable  to  the  average  sized  association 
in  operation.  Those  doing  a  large  business  and  collecting 
dues  from  day  to  day  require  an  altogether  different 
system  for  their  work.  We  will  not  attempt  to  show 
their  styles  and  methods,  but  rather  the  method  of  the 
average  association  in  operation  in  the  United  States. 

The  following  diagram  shows  a  form  for  rulings, 
entries,  footings  and  postings  for  those  associations  that 
collect  weekly  dues — the  quarterly  or  thirteen-weeks  con- 
tribution book.  The  detailed  description  and  use  of  this 
form  is  given  here  that  it  may  accompany  the  form,  not 
because  it  has  anything  to  do  with  auditing. 

The  sheets  are  ruled  for  fifty  numbers  on  a  double 
page,  or  folio,  and  are  numbered  consecutively  from 
I  to  50  (the  same  on  both  the  left  and  right-hand  page) 

[268] 


AUDITING :  ITS  METHODS. 


•o  -o 

V 

n 

s 

n 

to 

u 

m 

V) 

c 

a 

s 

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o 

rr 

o 

1/5    *-•    *i 


a; 


•o  5 


rt 


<«^ 

C    C 

•J    (U 
O    (U 

rt 

5fi-J2  3 

•r  <n  ^ 

i;  o  w. 

C  Ph  o 

<U  4>    M 

-  ^  -- 

»-    (LI  rd 


o  S    .  o 

ffl  vS-g-o 

z  rt   §  S 

o  w  ^. 

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r^  «^  2 

O  ^     C     rj 

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<  t«   ?^   o 


1^ 


CO  -<-• 


1 

Fines.  | 

Prem. 

Int. 

Dues. 

~T 

Fines. 

Prem. 

Int. 

Dues. 

: 

Fines. 

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Int. 

Dues. 

Fines. 

Prem 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dacs. 

II    Book 

jAdm.A 
1  Trans. 

1  Week  1      :               1 

11  Share.  ■       :             :  | 

1     No. 

:      :      :| 

1 

1 

■    ■    Ml 

OH 

< 

s 

Fines. 

Prem. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dues. 

1  Fines 

Prem. 

Int. 

Dues. 

Fines 

Prem. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

:      :      :  ■ 

Dues. 

:      :      ;  ■ 

Fines. 

Prem. 

Int. 

Dues. 

J      No. 

-  s 


(2891 


CHAITER  XIX. 

ciiul  from  51  to  100  or  00  on  the  next  double  page, 
both  left  and  right,  and  this  numbering  from  i  to  100 
is  continued  throughout  the  book.  For  the  second  and 
subset]uent  hundred  numbers  the  secretary  simply  places 
20  before  the  fust  nine  numbers  and  then  2  before  all 
the  balance  of  the  second  hundred,  and  this  is  repeated 
by  placing  in  a  similar  manner  3,  4,  and  5  before  the 
figures  for  the  subsequent  third,  fourth  and  fifth  hundred 
numbers  corresponding  to  the  number  of  pass-books 
issued. 

Tlie  space  at  the  top  of  each  series  of  columns  (dues, 
interest,  premiums,  fines)  is  used  for  inserting  the  dates 
of  each  weekly  meeting.  The  weekly  deposits  are  entered 
in  their  proper  colunui  and  at  the  close  of  each  meeting, 
when  receipts  are  all  in,  these  columns  are  footed  sep- 
arately, on  each  page  and  then  the  separate  totals  for  all 
the  pages  are  added  to  ascertain  the  totals  of  dues, 
interest  and  fines  and  these  totals  again  added  to  ascer- 
tain the  total  receipts  for  the  secretary.  If  the  grand 
total  balances  with  the  cash  received,  which  it  must  do, 
the  secretary  then  spreads  this  statement  of  receipts,  duly 
itemized,  upon  his  minutes,  and  subsequently  posts  the 
items  to  the  proper  columns,  suitably  arranged,  in  his 
cash  book. 

At  the  end  of  the  quarter  (or  13  weeks)  each  number 
or  account  is  footed  across  the  double  page  into  the 
"Total"  column,  and  these  totals  are  posted  to  the  indi- 
vidual ledger  accounts. 

The  footings  of  these  total  columns  may  then  be  added 
for  as  many  pages  as  are  used,  and  then  verify  cash  book 
totals  with  them. 

The  space  at  the  top  of  each  series  of  columns  is  also 
used  by  some  secretaries  for  inserting  a  number  for  each 
meeting,  besides  the  date. 

[270i 


AUDITING:  ITS  METHODS. 

When  the  association  becomes  a  few  years  old  this  con- 
secutive numbering  of  the  meetings  is  very  useful  in 
ascertaining  quickly  the  amount  of  dues  any  member 
should  have  paid. 

For  instance:  a  borrower  starts  on  the  fifteenth  meet- 
ing, paying  $2.00  per  week,  and  the  secretary  wishes  to 
know  on  the  150th  meeting  how  much  this  borrower 
should  have  paid.  He  simply  subtracts  fourteen^  the 
number  before  the  one  on  which  he  began,  from  the 
150  and  gets  136,  and  this  multiplied  by  $2.00  gives  the 
total  payment  of  dues,  $272.00,  which  should  be  to  his 
credit.  If  the  credit  does  not  show  this  amount,  then 
whatever  amount  is  short,  indicates  the  amount  in 
arrears. 

In  order  to  check  up  any  borrower's  payments  and  to 
avoid  looking  back  over  a  number  of  old  contribution 
books,  when  the  account  has  become  one  of  long  stand- 
ing, it  is  only  necessary  to  place  the  number  of  the  meet- 
ing on  which  the  borrower  started  on  his  page  in  the 
individual  ledger  at  same  time  you  make  entry  of  his 
name  and  date  of  opening  his  account. 

This  number,  minus  one,  deducted  from  the  number  of 
present  meeting,  will  always  give  you  total  number  of 
payments  due.  This  is  not  an  important  matter  in  regard 
to  non-borrowers  and  .so  far  as  they  are  concerned  may 
be  omitted. 

Monthly  Secretary's  Book. 

The  following  diagram  shows  a  form  for  those  associa- 
tions that  collect  dues  mcjnthly.  The  form  of  rulings, 
entries,  footings  and  postings  comprise  what  is  called  the 
contribution  book  arranged  for  twelve  months  or  one 
year. 

(271) 


CM  W'VEK    \IX. 


Piaes. 

Prem. 

Int. 

Dues. 

Pinea. 

Prein. 

Int. 

Dues. 

Fines. 

Prem. 

Int. 

Dues. 

Pines. 

Prem. 

Int. 

Dues. 

Pines. 

Prem. 

Int. 

Dues. 

Pines. 

:      :      : 

Prem. 

Int. 

Dues.  1      :      :      : 

Z 

^1    Book  1      :      :      :  Ij 

1 

Adm.&l 
Trans. '      :       : 

II  Share..      :      :      :  || 

II 

No.     1 

:      :      :ll 

II 

1  :  ;  : 

u 

Pines. 

Prem. 

Int. 

Dues. 

1  M   ; 

Pines. 

1           :      : 

Prem. 

1  :   M 

Int. 

1  -    ! 

Dues. 

Pines. 

:      :      : 

Prem. 

Int. 

Dues. 

? 

Pines. 

:      :      : 

Prem. 

Int. 

. 

Dues. 

J 

Pinea 

_ 

Prem. 

:       ; 

4 
la 

( 

Int. 

i 

Dues. 

1 

Pines.  1 

X 

Prem.  1 

J 

Int.     1 

a 

Dues. 

I 

Pines.  1 

7 

Prem. 

i 

Int.     1 

IC 

« 

,r 

Dues.  1 

i- 

1 

No.     1 

[2721 


AUDITING:  ITS  METHODS. 

The  explanation  just  previously  given  for  the  detailed 
use  of  the  1 3  weeks  book  will  apply  to  this  monthly  book 
if  only  modified  to  suit  the  difference  in  the  times  of 
payment. 

Secretary's  Cash  Booh. 

An  association  must  have  some  way  of  bringing  all  its 
accounts  together,  so  that  they  may  be  properly  sum- 
marized and  balanced,  showing  total  receipt  from  dues, 
interest,  premiums,  fines  and  other  sundry  items.  This 
is  done  through  the  columnar  Cash  Book,  sometimes 
called  the  Itemized  Cash  Book,  or  Secretary's  Cash  Book. 

The  rule  of  debit  what  you  receive  and  credit  what  you 
pay  out,  holds  good  with  cash,  as  in  all  other  transactions. 
The  bulk  receipts  are  entered  in  their  respective  columns 
of  the  Cash  Book,  debiting  cash,  while  the  disbursements 
are  entered  in  their  respective  columns,  crediting  cash. 

The  method  of  checking  the  Cash  Book  is  illustrated  in 
the  diagram  on  the  following  page. 

Treasurer  s  Cash  Book. 

The  treasurer  keeps  this  book  for  his  own  convenience. 
In  it  he  enters  the  gross  receipts  of  each  meeting  and  all 
disbursements.  If  kept  posted  properly  it  shows  at  all 
times  the  exact  amount  of  cash  on  hand.  This  book 
should  be  checked  against  the  Treasurer's  Receipt  Book, 
the  Warrant  Book,  and  the  Bank  Book,  an  appropriate 
check  sign  being  placed  opposite  the  last  entries  in  each. 

Members'  Ledger. 

In  checking  this  book  attention  must  be  given  to  the 
following  points: 

I.  The  account  of  each  shareholder  in  the  Ledger 
must  be  checked  by  comparison  with  the  entries  in  his 

[273] 


CHAPTER  XIX. 


TretMar«r'a 
Receipt. 

Debite<l 


Interest 


Preminin 


Fines 


Admission 


Transfer 


Books 


Paid  on 
Mortgages 


Paid  on  Pass 
Book 


Paid  up  Stock 


Sand.  BiUii 


DIAGRAM  CASH 
BOOK. 


Contribution  Book 
UeprenentA  Debits 
of  Cash  Acoonnt. 


CASH 
ACCOUNT. 


Order  Book 

Represents  Credits 

of  Casti  Account. 


Credited 


"Wltlnlruwals 


Loans  on 
Mortgns;es 


Loans  on 
Pass  Book 


DiTidemla 


Kxpeusen 


Salary 


Interest 


Sliorts 


Statioue  ry 


Paid  up  Stock 
Withdrawn 


Snndries 


[274] 


AUDITING:  ITS  METHODS. 

Pass  Book.  A  sign  indicating  that  this  has  been  done 
should  be  placed  against  the  Ledger  entries,  and  also 
opposite  the  last  Pass  Book  entry. 

2.  Items  posted  from  the  Contribution  Book  should 
be  checked  by  amount,  date,  and  folio,  and  another 
appropriate  check  sign  should  be  placed  against  the  last 
entries. 

3.  Withdrawal  items  should  be  checked  against  the 
Members'  Pass  Book,  and  Warrant  Book. 

4.  The  Dividend  account  must  be  examined  to  see 
that  all  dividends  due  to  each  member  have  been  properly 
credited,  and,  if  drawn,  the  items  must  be  checked  against 
the  Warrant  Book. 

5.  All  miscellaneous  items,  such  as  assessments, 
rebates,  and  everything  of  that  character,  must  be  checked 
carefully  against  original  entries. 

Withdrawals. 

Auditors  should  see  to  it  that  the  files  contain  properly 
signed  vouchers  from  withdrawing  members,  showing 
the  exact  amount  which  has  been  received.  The  signa- 
tures to  these  vouchers  should  be  compared  with  those 
entered  in  the  Constitution  Signature  Book,  if  such  a 
Book  is  kept;  if  not,  he  must  verify  the  signature  to  his 
own  satisfaction  in  some  other  way. 

In  checking  up  withdrawals,  he  should  note, — 

1.  That  applications  for  money  have  been  entered  in 
the  Withdrawal  Book  in  regular  chronological  order,  and 
that  they  have  been  acted  upon  in  this  order  by  the 
Directors  when  not  paid  immediately,  as  is  now  usually 
done. 

2.  That  all  warrants  for  the  payment  of  withdrawals 
correspond  with  the  dates  and  amounts  in  Cash  Book. 

[275] 


CHAPTER  XIX. 

3.  That  partial  withdrawals  are  properly  noted  in  the 
Member's  Pass  Book;  and,  if  the  withdrawal  is  complete 
and  absolute,  that  the  Pass  Book  has  been  surrendered, 
and  the  fact  of  withdrawal  entered  therein. 

4.  That  amounts  paid  out  on  withdrawal  have  been 
charged  against  their  proper  accounts  in  the  Members' 
Ledger. 

General  Ledger. 

This  is  a  very  important  book  in  connection  with  the 
accounts  of  the  association.  In  it  are  summarized  the 
details  of  all  the  other  books.  By  it  the  correctness  of  all 
the  other  accounts  is  to  be  finally  tested.  From  it  the 
Balance  Sheet  is  made  up.  It  tests  the  actual  condition  of 
the  association's  business,  indicating  the  assets  and  the 
liabilities,  the  profits  and  the  losses.  As  implied  in  its 
name,  the  accounts  of  this  Ledger  are  the  opposite  of  the 
individual  accounts  in  the  Member's  Ledger.  Herein  is 
applied  the  double  entry  principle  in  book-keeping.  Every 
debit  must  have  a  credit,  and  vice  versa. 

The  old  system  of  journalizing  is  now  generally  dis- 
carded, since  it  involves  a  great  deal  of  unnecessary  labor. 
Under  the  later  methods  each  item  is  entered  immediately 
in  its  appropriate  account,  or  posted  from  the  books  of 
original  entry,  without  passing  through  the  Journal. 

Even  the  General  Ledger  is  now  dispensed  with  by 
many  secretaries,  by  adopting  a  columnar  Cash  Book, 
described  on  a  previous  page. 

Building  association  accounts  differ  from  mercantile 
accounts  in  that  the  transactions  are  wholly  financial,  and 
are  uniform.  This  makes  possible  more  simple  methods 
of  book-keeping  in  certain  respects,  though  the  accounts 
are  very  intricate  on  account  of  the  character  and  multi- 
plicity of  the  items.     But  the  same  principles  of  debit  and 

[276] 


AUDITING:  ITS  METHODS. 

credit  must  still  lie  at  the  foundation  of  the  system,  and 
the  ultimate  result  of  book-keeping-  must  show  the  total 
assets  and  liabilities,  and  the  profits  and  losses  correctly. 
If  the  summarized  items  under  these  heads  fail  to  balance, 
then  there  is  something-  wrong  with  the  accounts. 

The  general  accounts  necessary  are  as  a  rule  as  they 
appear  in  the  secretary's  balance  sheet  on  a  subsequent 
page. 


Assets  and  Liabilities. 

The  assets  and  liabilities  may  have  some  such  classifi- 
cation as  follows — also  shown  in  secretary's  balance 
sheet : 


ASSETS. 

Cash  on  hand, 

Loans  on  mortgage  security, 

Loans  on  stock,  certificates  or 
pass-book  security. 

Loans  on  all  other  security, 

Furniture  and  fixtures, 

Real  estate, 

Real  estate  sold  on  contract. 

Real  estate — office  building. 

Due  from  borrowers  for  insur- 
ance and  taxes, 

Bonds, 

Deposits  in  other  building  and 
loan  associations. 

Deposits  in  other  financial  insti- 
tutions. 

Other  assets  in  detail. 


TOTAL, 
Interest  due  and  uncollected. 


LIABILITIES. 
Runnings  stock  and  dividends. 
Credits  on  mortgage  loans, 
Credits  on  other  loans, 
Credits    on    real    estate    sold    on 

contract, 
Paid-up  stock  and  dividends. 
Permanent     (non-withdrawable) 

stock. 
Deposits  and  accrued  interest. 
Deposits  secured  by  collateral. 
Reserve  fund. 
Undivided  profit  fund. 
Borrowed  money  and  accrued 

interest. 
Contingent  profit  on   real  estate 

sold  on  contract, 
Due  borrowers  on  unfinished 

buildings, 
Deposits  from  other  building 

and  loan  associations, 
Deposits  from  other  financial  in- 
stitutions. 
Other  liabilities  in  detail. 

TOTAL, 
Interest  due  and  uncollected. 


[277 


CHAPTER  XIX. 

The  schedule  must  be  sufficiently  comprehensive  in  its 
details  to  include  everything,  and  the  audit  must  be  so 
conducted  as  to  trace  every  item  into  this  schedule  so  that 
each  summary  may  be  fully  verified. 

The  amount  by  which  the  assets  may  exceed  the  liabil- 
ities is  usually  called  the  Reserve  Fund  and  Undivided 
Profit  Account. 

The  amount  by  which  t)ie  liabilities  may  exceed  the 
assets  is  usually  called  Shortage  or  Deficiency. 

Auditor's  Report  on  Special  Matters, 

Where  everything  is  found  correct  and  in  good  form 
the  auditor's  regular  certificate  is  usually  about  all  that  he 
need  file  in  the  way  of  a  report.  In  some  cases,  although 
he  may  sign  the  regular  certificate,  there  may  be  some 
matters  to  which  he  may  deem  it  necessary  to  call  the 
attention  of  the  shareholders.  In  deciding  as  to  whether 
or  not  he  should  make  any  report  on  such  special  matters, 
or  should  make  any  incidental  suggestions,  he  must  be 
guided  by  what  may  seem  to  him  to  be  necessary  for  the 
welfare  of  the  association.  A  few  illustrations  may  be 
suggestive : 

The  auditor  may  differ  with  the  secretary  or  the  direc- 
tors upon  some  matter  which  may  be  of  importance  to 
the  interests  of  the  association.  If  so,  he  should  state  the 
matter  plainly  so  that  it  may  be  clearly  understood,  being 
careful,  however,  not  to  be  too  elaborate  and  therefore 
tedious,  and  should  give  illustration  when  possible. 

He  might  find  that  the  secretary  or  other  officer  was 
underpaid  or  overworked,  and  might  think  it  better  for 
the  association  if  this  were  corrected. 

He  might  discover  that  the  officers  were  not  afforded 
proper  facilities  for  transacting  the  association's  business 
and  that  its  interests  were  in  consequence  crippled  or 
jeopardized,  and  could  make  some  recommendation. 

[278] 


AUDITING:  ITS  METHODS. 

He  might  find  that  the  system  for  filing  and  caring  for 
mortgages,  insurance  policies,  notes,  and  other  papers, 
was  not  a  good  or  safe  one. 

Many  other  such  incidental  matters  might  claim  his 
attention. 

In  making  special  reports  on  any  miscellaneous  matters 
an  auditor  should  act  deliberately.  He  should  be  careful 
not  to  do  anything  which  might  be  used  to  the  disad- 
vantage of  the  association  or  its  officers  by  some  dis- 
gruntled or  unwise  member,  or  some  officious  or  antag- 
onistic outsider. 

In  any  case  where  he  finds  that  the  accounts  and 
records  are  grossly  inaccurate  and  incomplete,  either 
through  carelessness,  incompetency,  or  a  purpose  to  de- 
ceive on  the  part  of  the  officers,  his  duty  is  plain.  He 
must  not  only  withhold  his  certificate  but  must  report 
facts  as  he  finds  them  to  the  association. 

Auditor's  Certificate. 

When  the  Auditor  has  completed  his  task,  if  he  has 
found  everything  correct,  he  should  prepare  and  sign  a 
certificate  in  some  such  form  as  follows : 

To   THE   Shareholders    of    the 

Building  and  Loan  Association. 
I  have  carefully  examined  the  books,  vouchers,  cash,  and  accounts 
of   your   Association,   and    find   the    same   to  correspond   with   the 

Balance  Sheet  as  presented  under  date  of 

I  also  find  the  present  conditions  of  the  Association  to  be  correctly 
presented  in  said  Balance  Sheet. 

Respectfully, 

Auditor. 

Safety  Insured. 

The  suggestions  here  made  are  sufficient  to  put  an 
inexperienced  auditor  on  his  guard,  and  also  to  indicate 

[279] 


CHAPTER  XIX. 

to  members  somethinj^  of  what  is  involved  in  an  audit, 
and  to  show  the  character  of  person  tliat  should  be  ap- 
pointed as  auditor. 

If  auditing  were  always  faithful  and  efficient  it  would 
save  much  trouble,  anxiety,  and  loss  to  members.  Even 
if  the  account  is  correct,  or  if  there  are  unintentional 
errors  in  it,  it  is  only  regular  and  competent  auditing  that 
will  insure  permanent  confidence  in  the  association  on  the 
part  of  members  and  of  the  public.  There  always  are 
apt  to  be  a  few  members  at  least,  and  not  a  few  outsiders, 
who  look  upon  an  association  with  more  or  less  distrust. 
If  such  as  these  see  that  the  affairs  of  an  association  are 
regularly  and  systematically  investigated,  then  their  con- 
fidence sooner  or  later  becomes  established.  Under  such 
a  system  officials  would  soon  learn  that  it  was  impossible 
to  secure  the  auditor's  certificate  to  unreliable  and  incor- 
rect accounts  and  statements,  and  shareholders  would 
understand  that  the  practice  of  any  fraud  upon  them 
would  be  impossible. 

By  the  adoption  of  some  such  system  of  auditing  as  is 
here  presented,  shareholders  make  such  provisions  and 
take  such  precautions  as  will  render  mistakes  well  nigh 
impossible.  They  have  delegated  authority  to  two  rep- 
resentative bodies,  each  of  which  acts  as  a  check  upon  the 
other.  The  board  of  directors  is  an  administrative  body; 
the  auditor  or  auditors  constitute  a  supervising  and  re- 
viewing department. 

The  directors  and  secretary  are  compelled  to  be  watch- 
ful, for  they  know  all  their  work  will  be  under  critical 
review. 

The  auditor  must  prove  himself  competent  and  do  his 
work  faithfully,  or  his  inefficiency  will  be  apparent  in  the 
course  of  time. 

State  supervision,  so  far  as  it  has  yet  been  developed, 
does    not    remove    the   necessity    for    private    auditing. 

[280] 


AUDITING:    ITS  METHODS. 

Indeed,  it  enforces  this  necessity,  and  this  is  its  object. 
A  state  supervising  official  does  not  take  the  place  of  the 
regular  auditor.  While  it  is  made  the  duty  of  the  state 
officials  to  make  personal  examination  of  the  business  of 
associations,  not  alone  at  regular  stated  periods  but  also 
at  irregular  and  unexpected  times,  still  it  remains  for  the 
management  of  the  associations  to  see  that  proper  audit- 
ing goes  hand  in  hand  with  the  examinations  that  are 
now  made  by  state  officials. 

It  is  to  be  hoped  that  the  various  officers  of  the  differ- 
ent states  having  in  charge  this  work  will  organize  a 
permanent  organization  among  themselves,  so  that  with 
closer  communication  and  exchange  of  ideas  the  efficiency 
of  these  departments  can  be  greatly  enhanced. 


[281] 


CHAPTER  XX. 

Reports. 

Their  Necessity. 

One  of  the  chief  arguments  in  favor  of  the  building 
association  as  a  saving  society  is  the  fact  that  it  is  man- 
aged by  the  members  themselves,  and  that  they  may 
therefore  at  all  times  know  exactly  the  status  of  their  own 
money,  and  also  the  condition  of  the  association.  Mem- 
bers can  gain  this  knowledge  only  through  the  regular 
periodical  publication  of  reports.  The  issuing  of  such 
reports,  therefore,  is  one  of  the  most  important  duties  of 
the  officers  of  an  association.  Consequently,  the  im- 
portance of  preparing  and  publishing  correct  reports  of 
the  business  transactions — with  itemized  exhibits  of  all 
receipts  and  disbursements,  together  with  all  informa- 
tion as  to  the  details  of  its  affairs — cannot  be  too  strongly 
urged  upon  the  officers  of  an  association. 

In  order  that  a  report  shall  be  of  the  highest  value 
it  is  necessary  that  not  only  shall  it  be  accurate,  but 
that  it  shall  be  published  at  sufficiently  short  intervals 
to  enable  the  members  to  keep  the  run  of  the  business 
in  their  minds,  and  also  to  give  them  opportunity  to 
take  steps,  when  necessary,  to  correct  any  evils  that  may 
be  found  to  exist.  Such  reports  should  be  rendered  at 
least  once  every  six  months,  and  a  copy  should  be  placed 
in  the  hands  of  each  member. 

If  an  association  is  properly  conducted  and  its  business 
in  a  prosperous  condition,  not  only  will  the  circulation 
of  reports  give  satisfaction  to  its  members,  but  they  may 
be  used  for  advertising  purposes.    In  this  way  additional 

[282] 


REPORTS. 

members  may  be  brought  in  and  the  prosperity  and  use- 
fulness of  the  association  increased.  The  knowledge 
that  reports  must  be  printed  and  circulated  at  stated 
periods  tends  to  put  both  officers  and  members  upon  their 
mettle,  and  thus  insures  better  management  for  the  asso- 
ciation. Every  one  connected  with  an  association  feels 
a  just  pride  in  their  ability  to  present  so  favorable  a 
report. 

On  the  other  hand,  if  an  association  is  not  prosperous, 
the  sooner  and  the  more  completely  this  fact  is  made 
known  to  its  members,  the  better  it  is  for  all  concerned. 
If  the  evils  found  to  exist  are  curable,  they  may  be 
remedied  promptly,  and  the  association  be  put  upon  a 
better  basis.  If  they  are  incurable,  steps  may  be  taken 
to  wind  up  the  association  before  its  affairs  become 
seriously  involved.  Under  such  circumstances,  moreover, 
the  public  would  be  warned  by  the  publication  of  an 
accurate  report,  and  outsiders  thus  would  not  become 
involved  by  becoming  members. 

Legal  Requirements. 

So  important  is  this  matter  of  reports  that  many  of 
the  states  have  enacted  statutes  requiring  that  such  re- 
ports shall  be  made,  and  outlining  their  form  and  char- 
acter. To  quote  in  full  the  statutory  provisions  of  the 
different  states  which  relate  to  this  subject,  and  to  enter 
into  a  comparison  and  discussion  of  them,  would  be 
foreign  to  the  purpose  of  this  work. 

Preparation  and  Publication  of  Reports. 

Whether  the  statutes  require  periodical  reports  to  be 
made  of  not,  such  reports  are  provided  for  in  the  constitu- 
tion, by-laws,  and  rules  of  the  associations  themselves. 
In  these  provisions  the  form  of  the  report  is  outlined  in  a 

[2831 


CHAPTER  XX. 

f^^encral  or  specific  way,  and  also  the  method  of  its  pubh- 
cation.  The  exact  form  in  which  the  report  of  any  asso- 
ciation shall  be  presented  and  the  method  of  its  publica- 
tion must  therefore  be  determined  by  the  statutory  re- 
quirements and  by  its  own  rules.  It  should  be  so  com- 
prehensive in  scope  and  elaborate  in  detail  as  to  make  it 
self-explanatory.  It  is  also  very  desirable  that  reports  be 
printed,  so  that  they  may  be  readily  available  for  exam- 
ination by  all  members  and  other  persons  interested. 

The  chief  part  of  the  work  in  the  preparation  of  a 
report  usually  devolves  upon  the  secretary.  Promptly,  at 
the  close  of  each  fiscal  term,  the  secretary  should  present 
a  properly  formulated  and  tabulated  report  of  the  business 
of  the  entire  term  to  the  directors.  The  directors  should 
refer  it  to  the  auditing  committee  for  examination  and 
verification.  When  the  directors  and  officers  are  satisfied 
that  the  report  is  correct,  the  secretary,  or  the  secretary 
and  the  president  if  so  required,  should  make  oath  or 
affirmation  to  its  correctness.  It  is  advisable  that  the 
report  when  completed  be  published  in  the  newspapers  or 
printed  in  convenient  form  before  the  meeting  of  the 
stockholders  at  which  it  is  to  be  presented,  so  that  each 
member  may  have  full  opportunity  to  examine  it  and  to 
learn  the  exact  standing  of  the  association  and  the  condi- 
tion of  its  business. 

Secretary  s  Balance  Sheet. 

An  examination  of  the  reports  of  numerous  associa- 
tions shows  that  the  accounts  most  generally  carried  by 
secretaries  are  as  illustrated  in  the  following  balance 
sheets  which  are  printed  here  as  a  suggestive  guide  for 
the  officers  of  new  associations — the  first  one  being  that 
of  a  serial  association  and  the  second  one  that  of  a  per- 
manent association : 

[284] 


REPORTS. 

SPECIMEN    REPORT— SERIAL    PLAN   ASSOCIATION. 
TWENTY-SEVENTH  ANNUAL  STATEMENT 

OF    TJIE 

Savings,  Loan  and  Building  Ass'n 

For  the  year  ending  December  31,  1919. 


RECEIPTS. 

Installments     (dues) $  55.827  00 

Interest   18,379  80 

Fine*    242  90 

Membership   fees 158  60 

Transfer    fees 10  50 

Matured    stock 10,300  00 

Rents     394   40 

Loans  repaid  and  matured  64,760  00 

Sale  of  real  estate 6,720  72 

Bills  payable 4,472  36 

Bills   receivable 3,000  00 

Outstanding    orders 1,000   00 

From    Treasurer 3,707  85 

Total   $168,863  62 

ASSETS. 

Loans  to  stockholders 1:303,260  00 

Installments  unpaid 1,755  60 

Interest  unpaid 921  «0 

Fines   unpaid 36  95 

Real  estate 7,200  00 

Real    estate    sold    on    con- 
tract    3,886  00 

Furniture  and  stationery.  .  300  00 

Total   $318,747   45 


DISBURSEMENTS. 

By    balance    of    last    state- 
ment     $  3.791   49 

Loans   on    real    estate   and 

shares    79.200  00 

Installments  withdrawn  and 

matured    48,769  00 

Interest  on  stock  withdrawn 

and  matured 13.987  72 

Expenses    2,647  86 

Taxes,  insurance  and  repairs  341  70 

Real  estate  sold  on  contract  385  00 

Real  estate 606  41 

Bills  payable 7,734  85 

Bills  receivable 3,000  00 

Matured  stock 8.500  00 

Total .$168,963  62 


UABIUTIES. 

Installments  paid  on  stock .  $317,543    50 
Ad.    Pay.    dues    $923.50— 

inter.    $68.76 977  26 

Installments    due 1.766  60 

Matured  stock 33.000  00 

Bills  payable 2,692  35 

Due  Treasurer 3,707  86 

Outstanding  orders 1,000  00 

Contingent  fund 11.660  00 

Profit 44.411   60 

Total $816,747  45 


SERIES  OF  STOCKS.  VALUES,  ETC. 


Time  in 

Shares  in 

Shares 

Dues  Paid 

Profit 

Value 

Scries 

Mos. 

Force 

Loaned  on 

Per  Share 

Per  Share 

Per  Share 

17 

182 

266 

74/. 

$66  00 

$22  94 

$88  94 

B 

128 

36 

34/2 

64  00 

21   40 

85  40 

C 

124 

10 

10 

02   00 

20  08 

82   08 

18 

120 

386 

47 

CO  00 

18  79 

78  79 

B 

116 

9 

S% 

58  00 

17  57 

75  57 

10 

108 

339 

36  y^ 

54  00 

16  23 

09  33 

B 

104 

132 

22 

52  00 

14   12 

CO  12 

C 

100 

7 

<i'A 

00  00 

13  06 

63  06 

SO 

M 

324 

24 

48  00 

12  03 

00  «3 

B 

92 

19 

8/, 

40  00 

11  06 

57  05 

C 

88 

90 

10 

44  00 

10  I) 

54   11 

21 

S4 

400 

22 

43  00 

»  21 

51  31 

B 

80 

87 

36/. 

40  00 

8  36 

48  30 

C 

70 

ie& 

120 

38  00 

7   64 

46  04 

laa-i] 


CHAPTER  XX. 


Time  in 

Shares  in 

Shares 

Dues 

Paid 

Profit 

Value 

Scries 

Mos. 

Force 

leaned  on 

Per  Share 

Per  Share 

Per  Share 

82 

73 

478 

66  yi 

$86 

00 

$6 

77 

$42  77 

B 

68 

123 

123 

34 

00 

S 

04 

40  04 

C 

64 

48 

48 

82 

00 

6 

36 

37  86 

8S 

60 

615 

60 

SO 

00 

4 

70 

84  70 

B 

68 

145 

142 

28 

00 

4 

00 

32  09 

C 

5S 

93 

90/, 

26 

00 

8 

58 

20  58 

S4 

48 

660 

104 

24 

00 

3 

00 

27  00 

B 

44 

IBS 

187^5 

22 

00 

9 

52 

84  6S 

C 

40 

147 

146/, 

20 

00 

2 

09 

22  09 

86 

3« 

635 

185Vi 

18 

00 

1 

60 

19  60 

B 

32 

193 

198  V4 

IS 

00 

1 

38 

17  83 

C 

28 

89 

88/2 

14 

00 

1 

02 

15  09 

86 

34 

991 

211 

12 

00 

75 

12  75 

B 

2* 

290 

289-^ 

10 

00 

52 

10   52 

C 

16 

103 

102 

S 

00 

33 

8  33 

9T 

12 

1094 

119^ 

6 

00 

10 

6  19 

B 

8 

319 

307 

4 

00 

08 

4  08 

C 

4 

210 

206 

2 

00 

03 

2  02 

SUMMARY 

OF    THE 

BUSIINBSS   OR  XMB   ASSOCIATION 

For  the  past  twenty-seven  years. 


RECEIPTS. 

From    dues $1,219,846  25 

From    interest 329,931  89 

From  premiums 56,342  47 

From   fines 6,089  40 

From   membership  feet..  3,961  60 

From  transfer  fees 367  75 

From    loans    repaid    and 

matured 1,206,675  09 

From   rents 10,503  33 

From    taxes    and    insur- 
ance repaid 1,018  69 

From  safe 130  00 

From  sale  of  real  esUte.  56,123  47 

From  real  estate  contracts  3,295  00 

From  bills  payable 41,850  95 

From  bills  receivable 3,740  00 

From  matured  stock. -15,200  00 

Balance  due  Treasurer..  4,707  36 


DISBURSEMENTS. 
For  loans  to  stockholders. $1,500,925  09 
For  stock  withdrawn  and 

matured    1,001,314   50 

For  interest  and  profit  on 

stock     withdrawn     and 

matured 286,738  89 

For  fixtures,  furniture,  etc.  324  82 

For  expenses 57,099  27 

For  taxes  and  insurance 

advanced 2,732  76 

For  real  estate  and  cert. 

of  purchase 45,516  62 

For    real    estate   sold   on 

contract   24,682  00 

For  taxes,  insurance  and 

repairs 6,050  60 

For  bills  payable 39,158  60 

For  bills  recetvabk 8,740  00 

Matured  stock 12,500  00 


Total    $2,989,783  dC 


Total    $2,989,788  00 


State  of  County  of ss. 

,  Secretary  of  the   Savings,  Loan  and  Building 

Association,  being  first  duly  sworn  upon  his  oath,  deposes  and  says  that  the 
foregoing  statement  is  a   full,  complete  and   true  statement  and   report   in  all 

particulars  of  the   Savings,   Loan  and  Building  Association  for  the 

fiscal  year  ending  December  31,  1919,  and  that  the  answers  to  the  questions 
herein  are  true  to  the  best  of  his  knowledge  and  belief.  

Subscribed  and  sworn  to  before  me  this  31st  day  of  December,  A.  D.  1919. 
[SEAL)  Notary  Public. 

We,  the  undersigned  stockholders  but  not  officers  of  the    

Savings,  Loan  and  Building  Association,  hereby  certify  that  the  foregoing  state- 
ment IS  true  in  all  particulars,  to  the  best  of  our  knowledge  and  belef. 

AUDITING  COMMITTEE. 

Dated  at   this  3Ut  day"  of  December,  A.  D.  1019. 

[288] 


REPORTS. 

Specimen   Reports. 

These  are  not  given  as  models,  but  simply  as  illustra- 
tions of  the  forms  in  which  reports  are  presented.  The 
reports  given  possess  some  very  commendable  features. 

While  the  particular  form  which  a  report  shall  take 
is  governed  chiefly  by  the  requirements  of  the  statutes 
and  the  rules  of  the  association,  yet  the  taste  and  judg- 
ment of  the  secretary  and  the  directors,  custom,  and  the 
circumstances  of  the  association  at  the  time  the  report  is 
made,  may  give  it  special  features  of  interest.  As  will  be 
seen,  the  reports  printed  are  mostly  all  tabulated  matter. 
Every  report  should  include,  in  addition  to  tabulated  and 
summarized  statements  of  this  character,  such  miscel- 
laneous statements  and  information  as  are  of  special 
interest  to  the  members  and  friends  of  the  association. 
Many  secretaries  make  their  reports  of  great  interest  and 
value,  and  in  this  way  add  much  to  the  popularity  and 
success  of  their  associations. 

As  already  said,  an  as.sociation,  to  attract  membership 
and  business,  must  be  advertised  in  a  community,  and  the 
best  method  for  doing  this  is  by  the  general  circulation 
of  well-prepared  reports,  giving  full  and  explicit  informa- 
tion in  reference  to  its  business  and  methods.  Secretaries 
and  directors,  in  the  preparation  and  publication  of  re- 
ports, should  bear  this  advertising  feature  in  mind,  and 
should  arrange  reports  so  as  to  be  used  in  this  way. 


lasii 


CHAPTER  XX. 


FINANCIAL  STATEMENT 


OP  THB 


of    

For  the  Fiscal  Year  Ending ,19. 

ASSETS.  LIABILITIES. 


Cash  on  hand $ Running  stock  and  dividends.  .$ . 

Loans  on  mortgage  security Credits  on  mortgage  loans 

Loans  on  stock,  certificates  or  Credits  on  other  loans........    . 

pass-book  security Credits  on   real  estate  sold  on 

Loans  on  all  other  security. ...     contract 

Furniture  and  fixtures Faid-up  stock  and  dividends.. . 

Real  estate Permanent  (non-withdrawaBle) 

Real  estate  sold  on  contract stock _. 

Real  estate — office  btiildin^ Deposits  and  accrued  interest.    . 

Due  from  borrowers  for  insur  Deposits   secured  by  collateral    . 

aflce  and  taxes Reserve   fund. 

Bonds Undivided  profit  fund 

Deposits  in  other  baildtnc  and  Borrowed  money  and  accrued 

and  loan  associations interest 

Deposits  in  other  financial  in-  Contiwgcnt  profit  on  real  estate 

stitutions   sold  on  contract i-  •.  v  ; 

Other  assets  in  det«il Due    borrowers    on    unfinished 

buildings    

Deposits    from    other    building 

and  loan  associations 

Dcposiu    from    other   financial 

institutions    

Other  liabilities  in  detail 


Total $ Total $• 

Interest  due  and  uncollected.  .$ Interest  due  and  uncollected.  .$. 


[388] 


REPORTS. 


RECEIPTS.  DISBURSEMENTS. 


Dues  on  running  stock $ Loans  on  mortgage  security. .  .  $ . 

Paid-up   stock Loans   on   stock,   certficates   or 

Deposits pass-book   security 

Credits  on  mortgage  loans Loans  on  all  other  security.  .  .    . 

Loans    on     mortgage     security  Unfinished  building  account...    . 

repaid    Withdrawals   of   running  stock 

Loans  on  stock,  certificates  or  and    dividends • 

pass-book  security  repaid Withdrawals  of  paid-up  stock.. 

Loans  on  all  other  security  re-  Withdrawals  of  deposits 

paid Borrowed  money 

Unfinished  building  account Deposits  in  other  building  and 

Borrowed  money loan    associations. 


Deposits    from    other    building  Deposits  in  other  financial  in- 

and  loan  associations stitutions 


Deposits    from    other    financial  Insurance   and   taxes   paid   for 

institutions    borrowers 


Real  estate  sold Real  estate   (purchase  price) 

Real  estate  sold  on  contract Real  estate  on  contract 

Insurance   and   taxes  refunded  Dividends  on  paid-up  stock, 

by  borrowers Interest  on  deposits. 


Interest    Interest  on  borrowed  money.  .    . 

Premium   Repairs  on  company's  real  estate 


Fines    Taxes 

Transfer  fees Salaries  of  officers  and  directors 

Passbooks  and   initiation   fees    Office     help,     rent     and     legal 

Rents     from     company's     real  services    

estate   All  other  expenses • 

Deposits  in  other  building  and  Deposits  by  other  building  and 

loan  associations  withdrawn    loan    associations   withdrawn 

Deposits  in  other  financial   in-  Deposits  by  other  financial  in- 
stitutions   withdrawn stitutions  withdrawn 

Sale  of  bonds Bonds  purchased 

Other  receipts  in  detail Mortgage    credits    transferred 

to  repay  loans 

Purchase  of  furniture  and  fix- 
tures  


Total $ — 

Cash  on  hand  at  close  of  last  Total , ♦• 

fiscal  year Cash  on  hand 

Total   $ Total  $. 

EARNINGS.  DISTRIBUTION. 

Interest    $ Dividends  on  running  stock.  .  .$. 

Premium    Dividends    on    mortgage    loan    . 

Fines    credits . 

Transfer   fees Dividends  on  paid-up  stock. . .    . 

Pass-books  and  initiation  fees Reserve  fund  credit. 

Rent  from  company's  real  estate    Undivided  profit  credit 

Transferred     f^rom     undivided  Interest  on  deposits. 

profit    fund Interest  on  borrowed  money.  .    . 

Salaries  of  officers  and  directors 
Office     help,     rent     and     legal 

services    

All  other  expenses 

Taxes   

Repairs  on  company's  real  estate 
Furniture  and  fixtures 


Total   f Total 

'  Auditing  Committee. 


I 


|28»i 


CHAPTER  XX. 


SPECIMEN  REPORT— PERMANENT  PLAN 
ASSOCIATION. 


ASSETS. 

Cash   on  band $ 

Loans  on  mortgage  se- 
curity     1,986.904  82 

Loans  on  stock,  certifi- 
cates or  passbook  security 

Loans  on  all  other  security 

Due  from  borrowers  for 
insurance  and  taxes.  . . 

Bonds  

Deposits  in  other  building 
and  loan  associations.. 


4S,267   65 


2.880  00 
2,610  00 


224   94 
14,650  00 


5,000  00 


Total   $2,057,537   41 


Interest    due    and    uncol- 
lected    


$        2,612   11 


RECEIPTS. 

Deposits   $1,360, 

Loans  on  mortgage  se- 
curity   repaid 601, 

Loans  on  stock,  certifi- 
cates or  pass-book  security     1, 

Loans  on  all  other  secur- 
ity  repaid 16, 

Deposits  from  other  build- 
ing and  loan  associations       62, 

Insurance  and  taxes  re- 
funded by  borrowers..  3, 

Interest   135, 

Safety  deposit  boxes.... 

Excise  tax  refunded 

Deposits  in  other  build- 
ing and  loan  associa- 
tions withdrawn 10, 

Sale  of  bonda 172, 


674  02 

180  68 

,285  00 

,329  36 

,000  00 

,283  14 

,540  39 

180  00 

303  98 


000  00 
350  00 


Total    $2,363,126  57 

Cash  on  hand  at  close  of 

last  fiscal  year 203,377   50 


LIABILITIES. 

Paid-up  stock  and  divi- 
dends    $      262,500  00 

Deposits  and  accrued  in- 
terest        1,859,720  18 

Reserve   fund 150,000  00 

Undivded  profit  fund 40,590  80 

Due  borrowers  on  unfin- 
ished buildings 149,720  48 

Deposits  from  other  build- 
ing and  loan  associations      70,000  00 

Deposits  from  other  finan- 
cial institutions 85,000  00 


Total $2,057,587  41 


Interest    due    and    uncol- 
lected   $ 


2,612   11 


DISBURSEMENTS. 

Loans  on  mortgage  se- 
curity     $    711 

Loans  on  stock,  certifi- 
cates or  pass-book  security     1 

Loans  on  all  other  security         4, 

Withdrawals  of  deposits.    1,447, 

Deposits  in  other  build- 
ing and  loan  associations 

Insurance  and  taxes  paid 

for  borrowers 3, 

Dividends  on  paid-up  stock       27, 

Interest  on  deposits 22, 

Salaries    of    officers    and 

directors    12,060  00 

Office  help,  rent  and  lejal 

services   10, 

All  other  expenses 5, 

Deposits  by  other  build- 
ing and  loan  associa- 
tions withdrawn 78,000  00 

Deposits  by  other  finan- 
cial institutions  with- 
drawn           10,000  00 

Bonds  purchased 187,000  00 


,386  74 

,650  00 
600  00 
235  08 

6,000  00 

,152  97 
500  00 
804  86 


250  00 
698  27 


Total    $2,621,236  42 

Cash  on  hand 45.267  66 


Total    $2,566,504  07  Total    $2,566,504  07 

PROFIT  AND  LOSS. 


EARNINGS. 

Interest    $  185,640  89 

Safety  deposit  boxes 180  00 

Excise  tax  refunded 308  98 


DISTRIBUTION. 
Dividends       on       paid-up 

stock $      25,000  00 

Undivided  profit  credit..         23,530  20 

Interest  on  deposits 59,585  90 

Salaries    of    officers    and 

directors    12,060  00 

Office  help,  rent  and  legal 

services    10,260  00 

All  other  expenses 5,598  27 


Total    $      136,024  87 


Total    $      136,024  87 

(  Auditing  Committee. 


[290] 


CHAPTER  XXL 


Rebate  and   Compound   Interest   Tables 

TABLE  No.  1.— REBATE  PERMANENT  PLAN. 

Showing  the  Course  and  Results  of  a  Loan  of  Two  Shares  of 

$500.00  Each,  or  $1,000.00. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Payments  of  dues,  50c.  per  share;  $1.00  per  week;  $26.00  every  6  months. 
Payments  of  interest,  60c.  per  share;  $1.20  per  week;  $31.20  every  6  months. 
Payments  of  $52.00  each  year  is  credited  on  the  mortgage,  reducing  the  interest 
at  6%  per  annum,  or  6c.  per  week,  or  $1.56  each  6  months— 43.12  each  year. 

The  average  value  of  the  2  shares  first  6  months  in  each  year  is  $13.00. 
The  average  value  of  the  2  shares  second  6  months  in  each  year  is  $39.00. 
2^%  dividends  on  these  average  values  is  32c.  and  97c.  respectively. 


ja 

.a 

«l?^ 

*> 

B 
H 

Total 
paid  on 
loan  eai 
year. 

Bal.  du 
on  Mor 
end  eac 
year. 

Interes 
paid 
each  6 
months 

1 
End  of  26  weeks 

$26  00 

32 

$31  20 

l8t   

62   " 

52  00 

97 

$52  00 

$948  00 

81  20 

"   26   " 

26  00 

32 

29  64 

2d  

"   52   " 

52  00 

97 

52  00 

896  00 

29  64 

"   2fi   "   1 

26  00 

32 

28  08 

3d  

"   52   " 

52  00 

97 

52  00 

844  00 

28  08 

"   26   " 

26  00 

32 

26  52 

4th  

"   52   " 

52  00 

97 

52  00 

792  00 

26  52 

26   " 

26  00 

82 

24  96 

5th  

•'   52   " 

52  00 

97 

52  00 

740  00 

24  96 

26   " 

20  00 

32 

23  40 

eth  

"   52   " 

52  00 

97 

52  00 

688  00 

23  40 

"   26   " 

26  00 

32 

21  84 

7th  

"   62   " 

52  00 

97 

52  00 

636  00 

21  84 

26   " 

26  00 

32 

20  28 

8th  

52   " 

52  00 

97 

52  00 

584  00 

20  28 

26   " 

26  00 

82 

18  72 

9th  .... 

52   " 

52  00 

97 

52  00 

532  00 

18  72 

26   " 

26  00 

32 

17  16 

10th  ... 

"   52   " 

52  00 

97 

52  00 

480  00 

17  16 

2C   " 

26  00 

32 

15  60 

11th  ... 

52   " 

52  00 

97 

52  00 

428  00 

15  60 

25   " 

26  00 

82 

14  04 

12th  ... 

52   " 

52  00 

97 

52  00 

376  00 

14  04 

26   " 

2()  00 

32 

12  48 

13th  ... 

"   .'•,2   " 

52  00 

97 

52  00 

324  00 

12  48 

"   26   " 

26  00 

32 

10  92 

"   52   " 

52  00 

17  09 

62  00 

272  00 

578  76 

14th  ... 

97 

10  92 

26   " 

26  00 

32 

9  36 

16th  ... 

"   62   " 

.52  00 

97 

52  00 

220  00 

9  36 

26   " 

20  00 

82 

7  80 

l«th  ... 

52   " 

52  00 

97 

62  00 

168  00 

7  80 

26   '• 

26  00 

82 

6  24 

17th  ... 

52   " 

52  00 

97 

52  00 

no  00 

6  24 

26   " 

26  00 

82 

4  08 

18th  ... 

"    62   " 

52  00 

97 

52  00 

64  00 

4  68 

"   26   " 

26  00 

82 

8  12 

19th  ... 

"   41   " 

41  00 

41  00 

23  00 

2  46 

$28  64 

$977  00 

$651  42 

[291] 


CHAPTER  XXI. 

EXPLANATION    AND    REMARKS. 

Total  length  of  time,  18  years,  9  months  and  two  weeks,  or  977 
weeks. 

Total  amount  paid  as  dues $   977  00 

Total    amount    of    dividends 23  54 

Total    amount    of    credits $1,000  54 

Less  amount  dues  already  applied  on  mortgage 977  00 

$     23  54 
Less  amount  of  dividends  transferred  to  mortgage 23  00 

$  54 

The  company  will  now  pay  the  borrower  54  cents  and  return  his 
cancelled  mortgage  in  full  settlement. 

Now,  how  about  the  interest  account,  the  rebates  and  the  cost 
of  the  loan?  There  has  been  considerable  confusion  and  misunder- 
standing— as  well  as  misstatements  on  these  points.  If  the  borrower 
had  taken  a  straight  loan  on  the  basis  of  the  interest  charged  in  the 
above  table  it  would  have  cost  him  in  interest  977  times 

$1.20  or    $1,172  40 

But  he  actually  paid  according  to  the  table  only 651  42 

Leaving  an  amount  which  represents  his  rebates  of $   520  98 

In  addition  to  the  above  he  was  credited  with  current  divi- 
dends   of     23  54 

Making  a  total  earning  on  the  money  he  saved  of 544  52 

The  interest  he  actually  paid  on  his  loan  was $   651  42 

The  interest  he  earned  on  the  money  he  saved  was 544  52 

The  actual  difference  in  interest  is  the  gross  earnings  to  the 

company    $106  90 

This  $106.90  is  not  what  the  loan  of  $1,000.00  from  the  building 
association  cost  the  borrower,  but  rather  the  difference  in  cost  be- 
tween what  he  paid  them  for  $1,000.00  and  what  they  paid  or  allowed 
him  on  the  $1,000.00  he  saved  and  returned  to  them  in  installments. 
In  other  words,  his  money  simply  was  not  worth  quite  so  much  in 
interest  as  the  interest  he  paid  the  association  on  its  money. 

You  must  bear  in  mind,  that,  when  the  borrower  began  the  loan, 
there  was  only  $1,000.00  involved,  but  when  the  transaction  was  con- 
summated and  the  money  repaid,  the  building  association  not  only 

[292] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

received  its  $1,000.00  back,  but  he  then  had  $1,000.00  in  his  home 
that  he  didn't  have  when  he  started.  We  have  $2,000.00  at  the  end  of 
the  term,  where  we  only  had  $1,000.00  at  the  beginning. 

Probably  another  statement  of  the  case  will  make  it  clearer. 

Suppose  that  A  deposits  $1,000.00  with  an  association  which 
agrees  to  pay  him  5%  per  annum,  or  $50.00  interest,  and  that  it 
then  loans  this  money  to  B  at  $1.20  per  week,  or  for  $62.40  for  the 
year.  The  association  then  makes  the  difference,  or  an  earning  of 
$12.40  on  the  transaction. 

Now  if  you  will  imagine  A  and  B  to  be  one  and  the  same  person, 
you  will  see  that  what  a  borrower  actually  does  in  a  building  asso- 
ciation is  simply  to  pay  a  little  higher  rate  of  interest  on  the  money 
he  borrows  in  consideration  for  obtaining  it  in  a  lump  sum  in  ad- 
vance, than  he  is  compelled  to  accept  on  money  he  has  to  loan,  or 
which  he  is  obliged  to  save  and  repay  to  the  association  in  install- 
ments. 

The  actual  cost  of  a  loan  from  any  building  association,  or  from 
any  other  institution  for  that  matter,  is  the  actual  rate  of  interest 
that  it  charges,  and  not  simply  the  difference  between  the  rate  you 
pay  it  and  what  it  pays  you  on  exchange  transactions. 

All  the  explanations  and  tables  that  ever  came  to  the  writer's 
attention  heretofore  have  assumed  that  the  borrower's  money  was 
not  worth  any  interest  to  him,  and  that  what  he  received  as  interest 
was  merely  a  gift  or  gratuity  from  the  association,  and  therefore 
should  apply  as  a  credit  against  what  interest  he  had  to  pay  the 
association,  and  to  that  extent  would  reduce  the  cost  of  the  loan, 
when,  as  a  matter  of  fact,  and  justice  and  correct  interpretation  of 
the  transactions,  the  difference  between  the  interest,  premium,  etc., 
paid  the  association  and  the  dividends,  rebates,  etc.,  allowed  the 
borrowers,  shows  the  gross  earnings  to  the  association,  and  not  the 
net  cost  of  the  loan.  It  also  shows  how  much  more  interest,  etc.,  a 
borrower  has  to  pay  for  a  loan  from  the  building  association  than 
he  can  obtain  on  his  own  money  when  dealing  with  such  an 
institution. 


[293J 
to 


CHAPTER  XXI. 


TABLE   No.  2.— REBATE   PERMANENT  PLAN. 

Same  as  Table  No.  1,  Except  the  Dues  Are  $1.00  Per  Share  or 

$2.00  Per  Week— ^52.00  Every  Six  Months. 

Interest  $L20  per  week,  $31.20  every  six  months. 

rrejiarcd  by  W.   H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Average  value  of  shares  for  6  months,  $26.00;  second  6  months, 
$78.00.  2H%  dividends  on  these  average  values  is  65c.  and  $1.95 
respectively.  Rebate,  r2c.  each  week,  end  of  each  year;  $3.12  for  6 
months ;  $6.24  for  year. 


ja 

.a 

*«« 

n 

V 

B 
H 

«Qto 

Total 
paid  on 
loan  ea 
year 

Bal.  du 
on  Mor 
end  eac 
year 

Interes 
paid 
each  8 
montlis 

1st  

End  of  26  weeks 

$52  00 

$0  65 

$31  20 

52   " 

104  00 

1  95 

$104  00 

$896  00 

31  20 

2d  

••   26   " 

52  00 

65 

28  08 

••   62   " 

104  00 

1  96 

104  00 

792  00 

28  08 

8d  

"   26   " 

52  00 

65 

24  96 

••   62   " 

104  00 

1  95 

104  00 

688  00 

24  96 

4th  

26   " 

52  00 

65 

21  84 

52   " 

104  00 

1  95 

104  00 

584  00 

21  84 

5th  

26   " 

52  00 

65 

18  72 

"   62   " 

104  00 

1  95 

104  00 

480  00 

18  72 

6th  

"   26   " 

52  00 

65 

15  60 

"   52   " 

104  00 

1  95 

104  00 

376  00 

15  60 

7th  .  .  .  . 

•'   26   " 

52  00 

65 

12  48 

52   " 

104  00 

1  95 

104  00 

272  00 

12  48 

8th  

26   " 

52  00 

65 

9  36 

62   " 

104  00 

1  95 

104  00 

168  00 

9  36 

9th  .  .  .  . 

"   26   " 

52  00 

65 

6  24 

■•   62   " 

104  00 

1  95 

104  00 

64  00 

6  24 

10th  ... 

•'   21   " 

42  00 

42  00 

22  00 

2  52 

I  $23  40    I    $978  00      | 


$339  48 


Total  length  of  time,  9  years  and  21  weeks,  or  489  weeks. 

Total  amount  paid  a.s  dues $  978  00 

Total  amount   of  dividends .  23  40 

Total  amount  of  credits $1,001   40 

Less  amount  already  applied  on  mortgage 936  00 

$  65  40 

Less  amount  paid  during  21  weeks 42   00 


Less  amount  transferred  from  dividends  to  pay  balance  due. 


23  40 
22  00 


$  1  40 

The  company  now  pays  the  borrower  this  $1.40  and  returns  mortgage  duly 
cancelled  in  full  settlement. 
If  the  borrower  had  taken  a  straight  loan  on  the  basts  of  interest  charged 

in  the  above  table  it  would  have  cost  489  times  $1.20,  or $  586  80 

But  he  actually  paid  according  to  table 889  48 

This  leaves  amount  of  rebates  actually  credited $  247  82 

Current   dividends  credited 23  40 

Making  total  earned  on  money  he  saved  and  repaid  of $  270  72 

The  interest  he  actually  paid  on  loan  was $  339   48 

The  gross  earnings  on  his  savings  were 270  78 

Actual  net  earnings  of  the  building  association $  68  78 

[294] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

TABLE    No.    3.— COMPOUND    INTEREST    PERMANENT 

PLAN. 
Showing  the  Course  and  Results  of  a  Loan  of  $1,000.00. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Payments,  $L00  per  week.  Interest,  $1.20  per  week  continuously. 
Dividends,  5% — 2i/^%  semi-annually — on  accumulated  dues  com- 
pounded ;  in  other  words,  dividends  are  added  to  the  principal,  at 
the  end  of  each  six  months,  and  draw  dividends. 

Current  average  value  each  6  months  is  $13.00  plus  the  credits 
beginning  each  term.  As  the  current  payments  of  dues  are  $26.00 
each  6  months,  and  average  value  only  $13.00,  there  is  always  $13.00 
more  to  be  added  at  end  of  each  term  to  make  the  total  credits  for 
beginning  the  next  term. 


X 

1 

o  Z 

11 

IS 

'<« 

a 

o  o 

Value  of  dues 
and  dividends 
beginning  of 
each  6  months 

> ; 

<  z 

■  •a 
:  « 

'  V 

j  o 

Total  average 
value  for 
dividends  curr 
6  months 

2%  dividends 

id 

"•a  <n 

C-O  o 

lis 

S2« 

•a  V  o 

•o  J*  « 
<  5  E 

Total  value 
of  dues  and 
dividends  at  e 
of  each  6  mon 

t  c 

i)  O 

1st  .. 

..$26  00 

$13 

00 

-  $13  00  +  i 

;  0  32  +$13  00 

=  $26  32 

$31  20 

52  00 

$26  32  + 

13 

00 

=     89 

32  + 

97  + 

13  00  : 

=  63  29 

31  20 

2d  .. 

.  .  78  00 

53  29  + 

13 

00 

=r  66 

29  -f 

1  65  + 

13  00 

=:  80  94 

31  20 

104  00 

80  94  + 

13 

00 

=  93 

94  + 

2  34  + 

13  00 

=  109  28 

31  20 

8d  .. 

..130  00 

109  28  + 

13 

00 

=  122 

28  -f 

3  05  + 

13  00 

=  138  33 

31  20 

156  00 

138  33  4- 

13 

00 

=  151 

33  + 

3  78  + 

13  00 

=   168  11 

81  20 

4th  .. 

..182  00 

168  11  + 

13 

00 

=  181 

11  + 

4  52  + 

13  00 

=  198  63 

31  20 

208  00 

198  63  + 

13 

00 

=r  211 

63  + 

5  29  + 

13  00 

=  229  92 

31  20 

5th  .. 

. .234  00 

229  92  + 

13 

00 

—   242 

92  + 

6  07  + 

13  00 

=  261  99 

31  20 

260  00 

261  99  + 

13 

00 

=  274 

99  + 

6  87  + 

13  00 

—  294  86 

31  20 

6th  .. 

. .286  00 

294  86  + 

13 

00 

=  307 

86  + 

7  69  + 

13  00 

=  328  55 

31  20 

312  00 

328  55  + 

13 

00 

-   341 

55  + 

8  64  + 

13  00 

=  363  09 

31  20 

7th  . 

.  .338  00 

363  09  + 

13 

00 

=  376 

09  + 

9  40  + 

13  00 

=  398  49 

31  20 

364  00 

398  49  + 

13 

00 

=  411 

49  + 

10  28  + 

18  00 

=  434  77 

81  20 

8th  .. 

..390  00 

434  77  + 

13 

00 

=  447 

77  + 

11  19  + 

13  00 

=  471  96 

31  20 

416  00 

471  96  + 

13 

00 

—   484 

96  + 

12  12  + 

13  00 

=  510  08 

31  20 

0th 

. .442  00 

510  08  + 

13 

00 

=  523 

08  + 

13  07  + 

13  00 

=  649  15 

31  20 

468  00 

649  15  -f 

13 

00 

=  562 

15  + 

14  05  + 

13  00 

—  589  20 

81  20 

10th  .. 

..494  00 

689  20  + 

18 

00 

=  602 

20  + 

15  05  + 

13  00 

=  630  26 

31  20 

!i20  00 

680  25  + 

13 

00 

z=  643 

25  + 

10  08  + 

13  00 

=  672  33 

31  20 

11th  .. 

. .646  00 

672  83  + 

18 

00 

=  685 

33  + 

17  18  + 

13  00 

=  715  46 

31  20 

572  00 

715  46  + 

13 

00 

=  728 

46  + 

18  21  + 

13  00 

=  759  67 

31  20 

12th  .. 

..598  00 

759  67  + 

18 

00 

=  772 

67  + 

19  81  + 

13  00 

=  804  98 

31  20 

624  00 

804  98  + 

13 

00 

=  817 

98  + 

20  45  + 

13  00 

=  851  43 

81  20 

13th  .. 

. .650  00 

851  43  + 

18 

00 

=  864 

43  + 

21  61  + 

18  00 

=  899  04 

31  20 

676  00 

899  04  + 

13 

00 

=  912 

04  + 

22  80  + 

13  00 

=  947  84 

31  20 

I4th  .. 

..702  00 

947  84  + 

18 

00 

=  900 

84  + 

24  02  + 

IS  00 

=  997  86 

81  20 

2  14 

2  14 

704  14 

205  86 
704  14 

$1,000  00 

842  40 
296  8S 

$1,000  00 

$646  64 

[2951 


CHAPTER  XXI. 

EXPLANATION    AND    REMARKS. 

Columns  with  plus  signs  between  them  are  added  together  on 
each  hue  to  make  the  total  appearing  in  the  n.cxt  column  to  the  right. 

Totals  in  next  to  last  cohmin  (dues  and  dividends  at  end  of 
term)  are  brought  over  into  third  column  (but  on  next  line  below) 
for  dues  and  dividends  at  beginning  of  term. 

Total  length  of  time  13|/>  years  or  702  weeks. 

On  account  of  there  being  a  balance  of  so  small  an  amount  as 
$2.14  due  to  close  the  account  with  the  last  meeting  in  the  six 
months'  term  it  is,  for  obvious  reasons,  assumed  that  the  borrower 
just  paid  this  $2.14  with  the  last  payment  in  the  term,  and  notified 
the  secretary  that  his  credits,  including  the  last  six  months'  dividend, 
to  which  he  would  be  entitled  at  the  next  meeting,  would  cancel 
his  mortgage,  which  he  would  request  be  done,  at  the  next  or  a 
subsequent  meeting.  This  saves  splitting  hairs  about  small  fractions 
of  interest  and  loss  of  dividends,  and  somewhat  simplifies  the 
calculations. 

It  will  be  observed   that  the  borrower  paid  according  to 

this   table,   dues   amounting   to $    704  14 

And   had  dividends  to  his  credit  of 295  86 

Total   to   balance    loan $1,000  00 

The  company  received  in  interest  a  total  of $   842  40 

The  company  allowed  and  credited  interest  amounting  to. .      295  86 

The  company  received  more  than  they  allowed $   546  54 

The  remarkable  thing  in  connection  with  this  table  as  compared 
with  the  results  in  Table  No.  1  is  the  time  in  which  the  loan  was 
paid  off  as  compared  with  the  time  loan  has  to  run  in  Table  No.  1, 
considering  the  fact  that  the  weekly  dues  paid  were  the  same  in 
both  instances. 

There  are  several  reasons  for  this ;  one  is  the  fact  that  the 
dividends  were  allowed  on  the  accumulated  dues,  and  the  second  is 
that  they  were  compounded.  A  third  is,  though  a  logical  necessity 
of  compound  interest,  that  the  dividends  were  retained  by  the 
company  to  the  credit  of  the  borrower,  which  is  quite  a  different 
proposition  when  considering  the  time  a  loan  has  to  run. 

In  working  out  these  tables  the  writer  was  himself  surprised  at 
the  results,  for  he  has  been  under  the  impression  for  a  long  time 
that  the  rebate  plan  would  be  shorter  in  time  and  probably  less  ex- 
pensive, owing  to  the  fact  that  the  rebates  are  on  the  basis  of  the 
interest  rate  that  is  paid,  or  at  least  6%  in  place  of  5%,  as  are  the 
dividends. 

A  comparison  of  the  loan  under  Table  No.  3  with  loan  in  Table 
No.  1  at  the  same  period  of  time  for  both,  to  wit:  ISyi  years  (the 
closing  period  for  Table  No.  3)  will  show  some  interesting  and 
probably,  to  most  readers,  some  new  facts  relating  to  the  operations 
of  compound  interest  as  compared  with  simple  interest,  rebated 
even  at  6%.     See  Remarks  under  Table  No.  4. 

[296] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


TABLE  No.  4. 
Comparing  Rebate  with  Compound  Interest  Permanent  Plans. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Table  No.  1,  with  its  dividends  and  6%  rebates,  down  to  the 
thirteenth  and  a  half  year,  which  is  the  full  period  of  Table  No.  3 
at  5%  compound  dividends,  are  here  carefully  and  in  detail  compared. 


End  1st  year .  . 
"  2d  year.  ... 
■'     3d  year..  .  . 

*th  year. .  . 
■'  5th  year..  . 
"     flth    year. . 

7th    year.. 

8th  year.. 
"  9th  year.. 
•'  10th  year. 
"  11th  year. 
"     12th   year. 

13th  year. 
"     ISyi   year. 


o  2"^ 
&  u  u 

o  ^  n 


$  1  29 
3  99 
6  83 
9  81 
12  94 
16  23 
19  68 

23  31 
27  12 
31  13 
35  84 
39  76 
44  41 

24  02 


tt  H 


Div.      $ 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 

Rebate 

Div. 


1  29 
3  12 
1  29 
6  24 
1  29 
9  36 
1  29 

12  48 
1   29 

1.5  60 
1  29 

18  72 
1  29 

21  84 
1  29 

24  96 
1  29 

28  08 
1   29 

31  20 
1    29 

34  32 
1   29 

37  44 
1   29 

20  28 
32 


ou-^ 


$  1  29 
4  41 
7  68 
10  06 
13  77 
16  89 
20  01 

28  13 
26  25 

29  37 
32  49 
35  61 
88  73 
20  60 


$  0  18 
87 

1  76 

2  85 

4  15 
6  68 

5  42 


«  t^  *i 


$0  42 
70 
84 
88 
66 
33 


9205  86 

280  78 

"$~iTl8 


$280  78 


$18  91 

8  78 

$16  18' 


$8  78 


[297 


CHAPTER  XXI. 

The  first  column  in  above  Table  No.  4  shows  the  full  year  periods. 

The  second  column  shows  compound  dividend  taken  from  2]/i% 
dividend  column  in  Table  No.  3,  where  they  are  shown  in  amounts 
for  each  six  months,  but  are  combined  for  the  year  in  above  table 
because  rebates  are  only  made  at  end  of  the  year. 

The  third  column  shows  dividends  and  rebates  taken  from  Table 
No.  1.  The  dividends  are  combined  for  the  year  thus,  32+97=1.29. 
The  rebates  are  obtained  as  follows  from  Table  No.  1  : 

The  full  interest  for  first  year  is  twice  $31.20  or $62  40 

The    full   rebate    is   twice   $1.56   or   $3.12 3  12 

This  amount  equals  2X$29.64,  the  interest  for  6  months  for 

second    year    or $59  28 

The  rebate  the  next  year  is  $3.12  from  $59.28,  but  this  is  equal 
to  twice  $3.12  from  $62.40,  a  full  year's  interest,  so  the  rebates  of 
interest  for  the  second  year  amounts  to  $3.12  and  for  the  third  year 
$6.24  and  the  fourth  year  $9.36  and  $3.12  added  for  each  succeed- 
ing year.  Notice  that  they  are  only  taken  down  to  the  13y2-year  term. 

The  dividends  and  rebates  are  then  added  and  extended  into 
totals  for  each  year  in  column  to  the  right. 

The  difference  between  these  totals  and  the  totals  in  the  second 
column  show  the  difference  between  amounts  credited  to  borrower 
under  separate  plans. 

The  first  year  the  dividend  credits  are  the  same  in  both.  The 
second  year  the  difference  between  $4.41  rebate  plan  and  $3.99 
compound  interest  plan  is  42  cents  in  favor  of  rebate  plan,  and 
then  follows  other  differences  as  shown  in  last  column. 

In  the  eighth  year  it  changes  to  18  cents  difference  in  favor  of 
compound  interest  plan  as  shown  in  second  last  column,  and  con- 
tinues on  the  increase  until  close  of  term.  You  can  see  that  this  is 
verified  by  taking  the  difference  between  the  totals  of  compound 
dividends  of  $295.86  and  totals  of  rebate  plan  $280.73,  and  also 
difference  between  the  columns  of  difference  of  $18.91  and  $3.78. 

This  shows  that  the  compound  interest  plan  overtook  and  began 
to  run  ahead  of  the  rebate  plan  in  the  eighth  year. 

The  difference  in  the  two  tables,  Nos.  1  and  3,  also  show  that 
while  the  borrower  in  Table  No.  3,  under  the  compound  interest 
plan,  was  prepared  to  cancel  his  loan  in  the  fourteenth  year  (13^/2 
years)  simply  because  he  allowed  his  dividends  to  accumulate  as  a 
credit,  the  borrower  in  No.  1  had  paid  exactly  the  same  amount  of 

[298] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

dues  ($702.00)  at  the  end  of  this  period  under  the  other  plan,  but 
would  have  to  continue  his  payments  for  over  five  years  longer,  ac- 
cording to  No.  1  Table. 

The  statement  of  each  at  this  point  is,  according  to  the  tables, 
as  follows : 

Table  No.  a— Dues  paid    $  704  14 

Dividends    creriiied    295  86 

Total    $1,000  00 

Table  No.  1— At  IS}^  years  dues  paid  13x52+26=4702  00 
Dividends    to    credit 17  09 

Total  credits $719  09 

Amount    of    mortgage $1,000  00 

Less   credits    719  09 

Amount    still    due $  280  91 

Requiring  according  to  the  Table  No.  1  over  bl/z  years  longer. 
They  had  both  paid  to  the  same  date  as  follows: 

Borrower,  Table   No.   1— Paid   dues $   702  00 

Paid    interest $   578  76 

Less    dividends    credited..        17  09        561  67 

Total  paid  ISVz  years $1,263  67 

Borrower,   Table   No.  3— Paid   dues $   704  14 

Paid     interest 842  40 

Total     $1,546  54 

Less  dividend  credits 295  86 

Net  total  paid  13^  years,  $1,250  68   $1,250  68 

An  am't  less  than  rebate  borrower.. $      12  99 

While  the  compound  plan  borrower  is  ready  to  cancel  his  loan  at 
this  point,  being  $12.99  aiicad  of  the  other  rebate  borrower,  the  latter 
has  still  $280.91  to  pay  with  additional  interest  during  the  five  years 
or  more. 

This  certainly  ought  to  be  convincing  as  to  the  desirability, 
economy  and  superiority  of  the  compound  interest  plan  over  the 
rebate   plan. 

[2991 


CHAPTER  XXI. 

TABLE  No.  5.— COMPOUND  INTEREST  PERMANENT 

PLAN. 
Showing  Course  and  Results  of  a  Loan  of  $1,000.00. 

Prepared  by  \V.   H.  Jones,  Public  Accountant,  Cincinnati,  O. 

Payments,  $2.00  per  week  as  dues,  interest,  $1.20  per  week  con- 
tinuously. Dividends  h%=2yz%  semi-annual — on  accumulated  dues 
compounded.  Current  average  value  each  6  months  is  $26.00  plus 
credits  beginning  term. 


11 

.13 

o 

B) 

•*4 

tl 

!2 

*"  c 
o  o 

Value  of  dues 
and  dividends 
beginning  of 
each  6  months 

Average  value 
current  6  mon 
to  be  added 

Total  average 
value  for 
dividends  cur 
6  months 

2 '4%  dividen 

Hoi: 

lU  ■"  u 

"•n  a, 

»;  O  3 
Ct3  O 

•  3  1)  u 
u.n  a 

in 

Total  value 
of  dues  and 
dividends  at  e 
of  each  6  mon 

1st  .  .. 

..$52 

00 

$26  00 

=  $26 

00-1-$ 

\   0 

65  +$26  00 

=:  $.52 

65 

$81  20 

104 

00 

$.52  65  -t-  26  00 

=:  78 

65  + 

1 

95  + 

26  00 

—   106 

60 

31  20 

8d  ... 

.  .156 

00 

106  60  -I-  26  00 

=  132 

60  4- 

3 

30  + 

20  00 

rr  161 

90 

81  20 

208 

00 

161  90  -t-  26  00 

=  187 

90  -f- 

4 

69  + 

26  00 

=r  218 

59 

81  20 

3d  ... 

.  .260 

00 

218  59  -1-  26  00 

=  244 

59  -f 

6 

10  + 

26  00 

—  276 

69 

31  20 

312 

00 

276  69  -f-  26  00 

=  302 

69  + 

7 

55  + 

26  00 

=:  836 

24 

81  20 

4th  .  . . 

.  .364 

00 

336  24  +  26  00 

—  362 

24  -1- 

9 

05  + 

26  00 

=  897 

29 

81  20 

416 

00 

397  29  -f  26  00 

=  423 

29  -1- 

10 

57  + 

26  00 

n:  459 

86 

81  20 

5th  .  . . 

..468 

00 

459  86  +  26  00 

==  485 

86  -t- 

12 

12  + 

26  00 

=  528 

98 

81  30 

520 

00 

523  98  -f  26  00 

=  549 

98  -t- 

13 

75  + 

26  00 

=  589 

73 

81  20 

6th  .  .. 

.  .572 

00 

589  73  -t-  26  00 

-  615 

73  + 

15 

37  + 

26  00 

=  657 

10 

81  20 

624 

00 

657  10  -f-  26  00 

=  683 

10  + 

17 

07  + 

26  00 

=  726 

17 

31  20 

7th  ... 

..676 

00 

726  17  -f-  26  00 

=  762 

17  + 

18 

80  + 

26  00 

=  796 

97 

81  20 

728 

00 

796  97  +   26  00 

=  622 

97  + 

20 

55  + 

26  00 

=  869 

52 

81  20 

8th  .  .. 

.  .780 

00 

869  52  +  26  00 

=  895 

52  + 

22 

87  + 

26  00 

—  943 

89 

31  20 

832 

00 

943  89  +   26  00 

=  969 

89  + 

24 

22  + 

26  00 

=  1020  11 

31  20 

(882 

00 

$188 

11 

$1020  11  $499  20 

188  11 

$811  09 

EXPLANATION    AND    REMARKS. 

It  will  be  observed  that  this  loan  was  allowed  to  run  for  the  full 
eight  years,  and  credits  amounted  to  $20.11  more  than  face  of  loan. 

It  was  necessary  to  do  this  in  order  to  obtain  the  last  six  months' 
dividend  of  $24.22,  which  really  produced  the  overpayment,  or 
excess  credit. 

The  borrower  paid  in  dues  a.s  above $    832  00 

Dividends   credited 188   11 

Total    credits $1,020  11 

Less  amount  of   mortgage 1,000   00 

$      20   11 
Company  will  now  return  $20.11  and  the  cancelled  mortgage. 

The  company  received  in  interest $    499  20 

The  company  allowed  dividends 188  11 

The  company  received  more  than  allowed $    811  09 

The  borrower  paid  in  dues $    882  00 

The  borrower  paid  in  interest 499  20 

Total  paid  in  eight  years $1,331   20 

Less  amount  of  dividends 188  11 

11,143  09 

Actual  amount  paid  in  dues 882  00 

Net  interest  earnings  of  building  association $    311  00 

[300] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


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A  u. 


a         A 


.    CHAPTER  XXI. 

EXPLANATION  AND  REMARKS  TABLE  No.  (5. 

lliis  is  a  perpetual  calendar  for  dates  by  the  week,  such  as  every 
building  association  needs  for  quick  reference  during  each  current 
six  months'  term.  The  date  of  your  first  meeting  in  January,  at  top 
of  calendar,  will  indicate  your  column  of  dates  for  that  term.  On 
account  of  leap  year  it  becomes  necessary  to  have  two  sections  of 
dates  from  January  to  July,  llie  extra  section  is  placed  at  the 
extreme  left,  because  it  will  only  be  used  once  in  about  four  years. 
Tlie  double  columns  for  consecutive  number  of  weeks — from  1 
to  26  each  way — are  located  at  several  different  places  for  conven- 
ience. To  ascertain  the  amount  of  dues  paid  from  January  2  (not 
leap  year,  and  this  will  apply  to  all  subsequent  reference,  unless 
otherwise  mentioned,)  to  May  1,  you  locate  the  date,  May  1,  and 
then  follow  this  line  to  the  right  to  the  first  column  of  weeks  and 
you  find  IS.  Now,  if  dues  are  paid  at  50c.  per  week,  the  amount 
would,  of  course,  be  $9.00;  if  at  $L00  per  week,  it  would  be  $18.00. 

To  ascertain  the  amount  of  dues  paid  and  the  average  value  of 
same  from  any  date  during  the  term  to  the  end  of  the  term  (and 
this  is  the  real  and  valuable  use  to  be  made  of  the  table)  you  first 
locate  the  date,  say  March  I,  then  follow  this  line  to  the  second 
column  of  weeks  and  you  get  18;  in  the  next  column  you  see 
amount  of  dues  paid  at  50c.  per  week— $9.00— and  the  average  value 
of  the  share  in  the  next  column  of  $3.29.  If  there  is  but  one  share, 
then  you  would  place  $3.00  in  your  dividend  book  as  the  average 
value  on  which  to  allow  dividends  for  that  term.  If  more  than  one 
share,  multiply  $3.29  by  total  number  of  shares  for  average  value, 
omitting  the  cents  in  the  final  result.  If  the  dues  paid  are  $1.00  per 
share,  then  you  use  the  columns  under  "1  share  at  $1.00"  in  the  same 
manner,  to  wit :  18  weeks  paid=:$18.00 ;  average  value,  1  share,  $6.58, 
multiply  by  total  shares  for  total  average  value.  When  you  are  in 
the  second  six  months'  term  use  the  calendar  to  correspond  and 
follow  lines  to  the  left. 

There  has  been  considerable  confusion  and  discussion  in  the  past 
in  regard  to  calculations  for  ascertaining  average  value  of  shares, 
whidi  determines  the  amount  they  are  entitled  to  dividends  on  and 
also  the  time  deposits  are  entitled  to  interest 

The  matter  can  be  cleared  up  once  for  all,  if  the  first  weekly 
meeting  in  every  term  is  made  the  pivotal  point  of  starting  and  the 
closing  of  the  time,  the  first  meeting  in  the  next  term. 

A  full  six-month  period  must  be  from  the  first  meeting  in  one 
term  to  the  first  meeting  in  the  next  term.  It  is  necessary  to  have 
full  six  months'  time  for  all  dividend  and  interest  calculations  made 
for  the  full  term.  Take  for  instance  the  term  from  January  3  to 
June  27  (see  Table  No.  6).  This  is  26  meeting  dates,  but  the  time 
is  really  only  25  weeks. 

Time  never  runs  backward  for  what  is  to  be,  but  always  forward. 

The  actual  time  in  weeks,  beginning  with  any  date,  say  Janua'-y 
24,  or  the  fourth  meeting  in  the  term,  down  to  the  week  to  which  the 
calculation  is  to  be  made,  say  June  6,  or  the  twenty-tliird  meeting 
in  the  term,  will  always  be  the  difference  between  the  number  of 

[802] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

the  meeting  at  the  time  calculation  is  to  be  made,  and  number  of 
meeting  at  date  of  starting,  or  as  in  this  case,  23 — 4=19  weeks. 

But  suppose  now  that  you  wanted  to  know  how  many  weeks  a 
dues  payer  had  paid,  beginning  on  the  fourth  meeting  and  paying 
up  to  and  including  the  twenty-third  meeting,  the  number  would  now 
be  23 — 3=20  weeks  dues  paid.  The  reason  for  this  is  that  both  the 
first  and  the  last  meeting  must  now  be  included. 

The  first  case  is  a  question  of  lapsed  time,  while  the  second  is  a 
question  of  number  of  meetings.  Get  this  difference  fixed  in  your 
mind. 

This  point  may  possibly  be  made  a  little  clearer  by  narrowing 
it  down  to  the  first  and  second  week.  If  a  depositor  put  in  $50.00  the 
first  week  and  drew  it  out  the  second  week,  how  many  weeks  interest 
would  he  be  entitled  to?  Why,  one  week,  of  course.  If  a  dues  payer 
paid  for  two  weeks,  how  many  weeks'  dues  should  he  have  to  his 
credit?    Why,  two,  of  course. 

Every  secretary  should  consider  the  time  the  old  term  has  to 
run — up  to  the  end  of  the  last  week,  or  to  the  first  week  in  the 
new  term. 

Why?  Because  the  secretary  cannot  declare  dividends  until  after 
the  business  is  closed  for  the  twenty-sixth  or  last  meeting  in  the 
term  and  has  ascertained  the  full  earnings  and  made  the  proper  dis- 
tributions and  balanced  and  closed  all  the  loss  and  gain  accounts. 

He  could  not  pay  a  member  any  part  of  the  new  dividend  on 
the  last  meeting  in  a  term  for  the  reason  that  the  member  has  not 
yet  been  credited  w'Mi  liis  share  of  the  new  dividend.  In  fact  the 
dividend  fund  has  not  yet  been  credited  with  any  part  of  this  new 
dividend.  This  is  done  only  after  the  closing  meeting  of  the  term. 
Hence,  if  a  member  cannot  draw  any  of  his  new  dividend  until  the 
first  meeting  of  the  new  term  (it  is  seldom  that  they  can  get  it  even 
then),  his  dividend  should  be  calculated  up  to  that  time. 

Take  the  case  of  a  depositor,  for  instance  : 

One  who  has  made  a  deposit  of  $100.00  on  March  8,  the  tenth 
meeting  in  the  term  (see  Table  No.  6)  and  allowed  it  to  remain 
over  to  the  next  term.  His  interest  as  all  other  depositors'  interest, 
should  be  calculated  up  to  the  first  meeting  in  the  next  term,  for 
remember  that  this  is  now  to  be  the  pivotal  point  of  starting  all 
cakulations  for  interest  on  his  deposit  in  the  next  term.  The  first 
meeting  in  the  next  term  being  really  the  twenty-seventh  meeting^ 
the  time  that  should  be  allowed  this  depositor  would  be  27 — 10=17 
weeks,  and  the  interest  on  $100.00  for  17  weeks  per  Tabic  No.  7 
would  be  $1.30  at  4  i>cr  cent. 

This  is  how  all  interest  on  deposits  should  be  calculated  at  tiie 
end  of  the  year  to  ascertain  the  interest  accrued  and  unpaid  and  to 
be  credited. 

Suppose  now  that  this  depositor  wished  to  draw  out  his  money 
and  interest  on  the  first  meeting  in  the  new  term.  All  he  would 
receive  would  be  the  amount  to  his  credit,  and  no  additional  interest 
woukJ  be  allowed  for  the  time  of  1  week  between  the  two  terms.  He 
would  not  Ix;  entitled  to  any. 

i:!o:n 


CHAPTER  XXI. 

Suppose  now  that  instead  of  drawing  it  all  out  on  the  first  meet- 
ing he  had  sinipl)  drawn  the  interest,  and  later,  say  on  tlie  tenth 
mwtinR  in  the  new  term,  lie  wished  to  draw  $50.00.  The  difference 
between  tiie  tenth  and  tlic  first  would  he  0  weeks,  on  which  he  would 
be  entitled  to  interest,  amounting,  at  1%,  per  table  No.  7,  to  one- 
half  of  (iOc.  or  34c.  on  $50.00.  Wliere  a  partial  withdrawal  of  a 
deposit  is  made,  interest  is  calculated  on  the  amount  withdrawn  only. 
The  remainder  will  he  credited  with  interest  at  the  end  of  the  term, 
or  at  any  time  previous  that  it  may  be  withdrawn.  We  repeat 
that  you  must  remember  the  pivotal  point  of  starting  all  interest 
calculations,  is  to  be  the  first  meeting  in  each  term  and  ending 
with  the  first  meeting  of  the  next  term,  or  on  date  of  withdrawal, 
if   drawn  previous   to  the   full   term. 

If  dividend  and  interest  calculations  are  invariably  made  upon 
this  basis  there  can  never  be  any  discussion  or  disputes  as  to  its 
accuracy. 

This,  in  the  opinion  of  the  writer,  determines  the  correct  value  of 
the  tables  of  six  months'  averages,  to  be  according  to  those  prepared 
and  given  in  this  work,  under  Permanent  Plan,  System  II,  and  used 
in  Table  No.  6. 

Your  attention  is  called  to  the  dates  of   December  30  and  31. 

Whenever  a  weekly  meeting  falls  on  either  of  these  dates  you  are 
likely  to  have  27  meetings  in  the  last  six  months  of  the  year.  This 
will  recur  every  seven  years.  It  is  occurring  every  year  to  one  or 
more  associations.  Most  associations  keep  the  fiscal  year  concurrent 
with  the  calendar.  If  the  term  ends  with  the  calendar,  or  if  the 
twenty-sixth  meeting  is  the  last  one  held  in  December,  they  always 
have  it  remain  so,  even  when  the  twenty-seventh  meeting  occurs. 
This  they  take  care  of  by  crowding  it  in  with  the  other  26  meetings, 
usually,  by  making  the  entries  for  this  one  meeting  all  on  one  folio 
of  the  Dues  Book,  where  the  rulings  do  not  provide  for  fourteett 
meetings  every  quarter. 

If  the  fiscal  year  ends  with  the  last,  or  any  other  meeting,  in  any 
other  month  and  is  retained,  then  it  must  be  treated  in  the  above 
manner  when  this  twenty-seventh  meeting  recurs.  Some  associa- 
tions allow  this  twenty-seventh  meeting  to  change  their  fiscal  year 
every  time  it  recurs.  This  defers  the  ending  of  their  fiscal  year  one 
week  later  every  seven  years. 

It  is  customary,  when  this  occurs,  to  treat  it,  so  far  as  dividends 
and  interest  on  deposits  are  concerned,  as  a  part  of  the  six  months, 
instead  of  six  months  and  one  week. 

When  the  association  allows  it  to  change  its  fiscal  year,  the  ques- 
tion of  dividends  and  interest  on  deposits  needs  no  adjustment. 


[3041 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

TABLE  No.  7. 
Weekly  Interest  On  a  Deposit  of  $100.00  at  4%,  4J^%  and  6%. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 


i% 

Weeks 

iy2% 

Weeks 

5% 

79i3 

1 

81%6 

1 

9^3 

15%, 

2 

16^3 

2 

19^3 

23M3 

3 

252%6 

3 

281^3 

30i9i3 

4 

34^3 

4 

38%3 

38%3 

5 

43%6 

5 

48M3 

46%3 

6 

511%3 

6 

57%3 

531M3 

7 

60i%« 

7 

67^3 

61%a 

8 

69^3 

8 

76i?43 

69Hs 

9 

772%6 

9 

867/43 

76% 

10 

se-'Az 

10 

96^3 

84%3 

11 

95%6 

11 

1051943 

92^3 

12 

IO31M3 

12 

115^3 

100 

13 

112V^ 

13 

125 

107%3 

14 

121243 

14 

134^3 

115^ 

15 

1292^ 

15 

144-}43 

123^3 

16 

138%3 

16 

1531^3 

130i%3 

17 

147%6 

17 

163%3 

138%3 

18 

1551943 

18 

173H3 

146%3 

19 

1641^^ 

19 

182943 

I.531M3 

20 

173M3 

20 

192yi3 

m^Az 

21 

1811%6 

21 

201i?43 

169^3 

22 

190%3 

22 

2117^3 

176i%3 

23 

199V^6 

23 

221  %3 

i8-iyi3 

24 

207O/13 

24 

2301943 

192543 

25 

216%fi 

25 

240^3 

200 

26 

225 

26 

250 

Interest  on  $  10.00  would  be  Vio  above  amounts 


20.00 

M,      " 

30.00 

Vio     " 

40.00 

%      " 

200.00 

double  above  amounts 

300.00 

3  times 

400.00 

4  times 

[3051 


CHAPTER  XXI. 

Table  No.  7  is  very  valuable  for  quickly  and  reliably  arriving 
at  the  interest  on  deposits  withdrawn  during  the  current  term  at 
rates  of  either  4%,  4^^%  or  5%. 

There  are  three  conditions  of  time  that  deposits  run  that  it  is 
necessary  for  a  secretary  to  determine. 

1st.  To  ascertain  the  time  on  a  deposit  carried  over  from  a 
previous  term  and  withdrawn  during  the  current  term. 

2d.  To  ascertain  time  a  deposit  has  run  that  was  made  in  early 
part  of  term  and  withdrawn  later  during  the  same  term. 

3d.  To  ascertain  time  a  deposit  has  run  that  was  made  during 
the  term  and  allowed  to  run  over  into  the  next  term. 

Suppose  in  the  first  case  $50.00  is  to  be  withdrawn  with  4% 
interest  on  April  20th,  by  referring  to  calendar  Table  No.  6  you  will 
ascertain  that  April  20th  is  16  weeks  from  the  first  week  of  the 
year  (and  as  all  interest  calculations  have  been  made  up  to  the  first 
week  as  explained  in  remarks  under  Table  No.  6)  the  number  of 
weeks  interest  to  which  he  would  be  entitled  would  be  16 — 1=15 
weeks.  According  to  the  above  table  15  weeks  interest  at  4%  is  |1.15 
on  $100  and  one-half  tliis  amount  on  $50.00  or  57  cents. 

The  interest  previously  credited  at  the  end  of  the  term  on  this 
deposit  may  have  been  withdrawn,  but  if  not  it  could  be  withdrawn 
at  this  time  in  addition. 

Suppose,  in  the  second  case,  a  deposit  of  $50.00  is  made  on 
March  2d,  or  the  ninth  week,  and  is  to  be  withdrawn  May  25th,  the 
twenty-first  week.  The  elapsed  time  will  be  21— 9=12  weeks.  Ac- 
cording to  the  table,  interest  for  twelve  weeks  on  $100.00  at  i%  is 
92  cents  and  on  $50.00  it  will  be  one-half  as  much  or  46  cents. 

Suppose,  in  the  third  case,  a  deposit  of  $100.00  is  made  on 
March  16th,  or  the  eleventh  week  from  the  beginning  of  the  term, 
as  shown  in  weeks'  column,  the  elapsed  time  will  be  up  to  the  twenty- 
seventh  of  first  meeting  in  next  term  and  27 — 11=16  weeks.  (See 
explanations  under  Table  No.  6.)  The  interest  for  16  weeks,  accord- 
ing to  table,  will  be  $1.23. 

This  is  a  case  where  the  second  column  of  weeks  comes  in  handy, 
as  it  really  counts  the  lapsed  weeks  up  the  column  from  the  twenty- 
seventh  week,  and  always  gives  the  exact  number  of  weeks  opposite 
the  dates  of  starting  deposits  during  the  term,  to  wit :  opposite  date 
of  starting,  March  16th,  in  the  second  column  of  weeks  will  be  found 
sixteen,  which  is  the  correct  number  of  weeks  reached  at  once. 

This  is  important  because  it  is  the  greatest  use  that  a  secretary 
has  of  the  table  when  making  his  calculations  on  deposits,  in  order 

[3061 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

to  ascertain  amount  of  interest  accrued  and  unpaid  at  end  of 
each  term. 

It  is  important  to  bear  in  mind  the  two  methods  of  obtaining  the 
lapsed  time.  In  the  two  former  cases  they  are  alike  as  the  first 
column  of  weeks  is  used,  and  in  the  last  one  it  is  different  as  the 
second   column   is    used. 

When  deposits  are  received  at  different  times  during  the  term 
from  the  same  party,  it  will  be  necessary  to  make  separate  calcula- 
tions on  each  amount  at  the  end  of  the  term. 

Any  secretary  who  has  considerable  of  this  to  do,  at  the  end  of 
each  year,  will  find  it  to  be  of  great  advantage  to  make  a  slip  with 
the  weekly  dates  for  the  current  term  of  6  months  running  from 
top  downward  and  with  the  numbers  running  up  from  1  to  26  and 
then  place  the  interest  rate,  47o,  i]/^7o  or  5%,  whichever  he  uses,  at 
the  side  of  the  number,  just  reversing  the  way  it  runs  in  the  table. 
In  this  way,  as  soon  as  you  have  ascertained  the  correct  time  in 
weeks  on  the  different  amounts  of  deposit,  you  will  have  the  interest 
rate  per  $100.00  right  before  you. 


[307] 


CHAPTER  XXI. 


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REBATE  AND  COMPOUND  INTEREST  TABLES. 

Table  No.  8  shows  in  a  most  graphic  and  comprehensive  way 
the  relations  of  a  borrower  to  a  building  association,  and  the  exact 
financial  condition  of  each  from  year  to  year.  The  triangle,  A,  D, 
C,  represents  the  borrower,  and  in  each  trapezoid,  X,  Y,  Z,  are  shown 
the  amount  of  dues  he  has  paid  to  end  of  each  year:  $52.00  for  the 
first;  $104.00  to  the  second,  etc.  The  triangle,  A,  B,  C,  represents 
the  building  association  having  made  a  loan  of  $1,000.00,  and  how 
much  less  the  loan  becomes  at  the  end  of  each  year,  as  shown  in 
the  trapezoids,  L,  M,  N,  being  $948.00  at  the  end  of  the  first  year; 
$896.00  end  of   second,   etc. 

It  will  be  observed  that  the  full  amount  of  $1,000.00  is  involved 
continuously  throughout  the  period  shown,  but  is  shifted  each  year 
in  its  relations  as  to  how  much  of  the  $1,000.00  is  still  owing  the 
building  association  and  how  much  of  the  $1,000.00  has  been  credited 
to  the  borrower.  The  relations  they  began  at  the  end  of  the  first 
year  are,  $52.00  to  the  credit  of  the  borrower  and  $948.00  still  owing 
the  building  association ;  the  second  year  the  relation  is  changed 
to  $104.00  to  $896.00,  etc. 

Another  point  to  observe  is  that  this  diagram  shows  it  started 
with  a  loan  of  $1,000.00,  and  it  is  assumed  that  the  borrower  ob- 
tained this  loan  for  the  purpose  of  investing  in  a  home,  or  keeping 
it  invested  in  some  other  way,  for  it  shows  that  at  the  end  of  the 
period  the  building  association  has  received  all  of  its  money,  or 
$1,000.00,  and  the  borrower  presumably  has  his  $1,000.00  still  invested 
(if  he  did  not  lose  it  in  some  poor  investment).  Anyhow,  the 
first  $1,000.00  has  now  been  the  means  of  enabling  the  borrower 
to   save   a   second   $1,000.00. 

The  first  two  horizontal  lines  of  spaces  at  the  top  shows  the 
dividends  and  rebates  allowed  the  borrower,  and  the  last  horizontal 
line  of  spaces  at  the  bottom  shows  the  interest  paid  to  the  building 
association  under  the  same  rebate  plan.  It  will  be  observed  that 
the  interest  paid  the  first  year  to  the  building  association  under  this 
plan  is  $62.40,  and  that  the  second  year  the  borrower  gets  a  rebate 
of  $3.12  and  the  building  association  only  $59.28,  the  two  amounts, 
$3.12-f$59.28=:$62.40,  which  is  same  amount  of  interest  involved 
as  the  first  year.  The  same  amount  is  involved  every  year,  only  it 
increases  as  a  credit  to  the  borrower  and  decreases  in  amount  paid 
to  the  building  association  in  proportion  as  the  credits  of  the 
borrower  increases  and  his  indebtedness  decreases,  as  shown  in  the 
corresponding  trapezoids  for  each  year. 

This  rebate  plan  is  fully  illustrated  and  described  in  Table  No.  1. 

[309  J 

21 


CHAPTER  XXI. 

The  third  horizontal  hnc  of  figures  at  the  top  and  the  first  line 
at  the  bottom  show  the  compound  interest  relations  of  borrower  and 
building  association,  more  fully  illustrated  and  described  in  Table 
No.  3.  The  diagram  is  not  extended  for  the  full  time  of  the 
rebate  plan,  but  only  far  enough  to  make  comparisons  with  Table 
No.  3,  as  more  fully  described  under  Table  No.  4. 

COMPARISONS  OF  EARNINGS. 

In  comparing  the  earnings  of  the  company  in  Table  No.  3  in  this 
instance,  to  wit,  $546.54,  with  the  earnings,  to  wit,  $106.90,  as  shown 
in  Table  No.  1,  one  cannot  but  wonder,  at  first  thought,  why  the 
earnings  are  so  much  larger,  apparently,  in  the  one  case  than  in 
the  other. 

On  reflection  you  will  note  several  reasons  for  this. 

1st.  All  that  a  building  association  does  in  transacting  its  busi- 
ness is  to  act  as  a  sort  of  clearing  house  for  its  members,  and  all 
that  it  can  ever  expect  or  hope  to  make  as  a  profit  is  the  diflference 
between  the  rate  of  interest  it  charges  on  its  loans  and  the  rate  of 
dividends  it  pays  its  members  who  furnish  the  money.  In  both  cases 
above  the  amounts  are  gross  earnings,  and  not  net  profits.  This 
was  illustrated  by  the  supposed  case  of  the  association,  or  company, 
receiving  $1,000.00  from  A  and  loaning  it  to  B,  as  noted  in  the 
remarks  under  Table  No.  1. 

2d.  In  making  comparisons  of  any  transactions  between  the 
company  and  borrowers  the  element  of  time  the  loan  has  run  must 
always  be  taken  into  consideration  to  ascertain  gross  earnings. 

For  instance,  the  first  year  that  the  company  makes  a  loan  to  B, 
a  borrower,  he  is  presumed  to  begin  paying  in  installments,  say,  of 
$1.00  per  week,  and  at  the  end  of  the  year  he  will  have  paid  $52.00. 
The  company  this  year  will  receive  $62.40  as  interest  on  a  loan  to 
him  of  $1,000.00,  while  he  will  receive  interest  only  on  $52.00,  or  an 
average  of  $1.29  on  the  basis  of  a  5%  dividend. 

Ten  years  later,  if  pa>Tnents  are  kept  up,  the  amount  still  owing 
the  company  will  be  reduced  to  less  than  one-half  and  the  interest 
will  be  approximately  the  same  as  the  dividends.  And  at  a  still  later 
period,  if  payments  are  kept  up,  the  interest  due  the  company  will 
be  practically  nil  as  compared  with  the  dividends  on  the  dues  paid 
by  this  borrower. 

When  the  building  association  first  makes  this  loan,  per  Table 
No.  8,  it  obtains  the  money  from  the  shareholders,  to  whom  it 
agrees  to  pay  dividends  thereon. 

[310] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

Let  us  assume  for  the  sake  of  the  argument,  that  it  is  a  syndi- 
cate of  thirteen  members,  from  whom  the  $1,000.00  is  obtained.  The 
loan  is  made  in  the  usual  manner,  and  all  goes  well  to  the  end  of 
the  year. 

Now  let  us  see  if  we  cannot  ascertain  the  net  profits  to  the 
building  association  for  this  year,  and  also  subsequent  years,  going 
as  far  as  the  third  year  to  show  some  in  which  rebate  is  allowed. 
Subsequent  years  would  show  same  results  under  same  treatment, 
assuming  the  dividend  at  5%  and  interest  charges  $1.20  per  week 
for  the  first  year,  and  for  the  second  and  subsequent  years,  dividends 
5%,   rebate  6%  and  interest  charges  $1.20  per  week. 

This  should  figure  out  for  the  first  year  exactly  to  the  dif- 
ference between  gross  interest  charge $62  40 

and  5%  dividends 50  00 

or  a  total  net  earning  of $12  40 

The  second  year  the  clearing  house  or  building  association 
should  show  a  net  earning  as  follows:  (See  details  on  following 
page.) 

Gross  interest $62  40 

Less  6%  rebate  to  borrower $  3  12 

Less  5%  dividends  to  borrow  first  6  months 32 

Less  5%  dividends  to  borrower  second  6  months.  ...         97 

Less  5%  dividends  to  sjiidicate  first  6  months 23  38 

Less  5%  dividends  to  syndicate  second  6  months...  22  73 

Total  allowances $50  52    $50  52 

Or  a  total  net  earning  second  year  of $11  88 

The  original  syndicate  now  had  returned  to  their  clearing  house 
during  the  first  6  months,  $26.00,  with  an  average  value  of  $13.00, 
and  this  same  $26.00  as  it  was  returned  was  reloaned  by  the  clearing 
house  to  some  other  borrower,  and  to  this  e.xtent  the  syndicate's 
interests  were  transferred  to  some  other  loan,  not  as  a  matter  of 
any  record,  but  as  a  matter  of  fact  and  fiscal  transaction. 

Mr.  Borrower  received  credit  in  dividends  on  his  $13.00 $0  32 

Mr.  Syndicate  got  credit  in  dividends  on  $1,000— $13=$987.00. .  24  68 
We  will  allow  the  extra  half  cent  in  dividends  to  the  syndicate, 

to  clear  the  transactions  of  fractions  in  final  results. 
The  next  six  months  Mr.  Borrower  installed  $26.00  more  with 
an  average  value  of  $13.00,  and  as  he  did  not  get  any  rebate 
on  the  first  six  months  installment  of  $26.00  he  has  to  his 
credit,   on   which   he   is  entitled   to  dividend,  the   sum   of 

$26.00  plus  $13.00=$39.00,  dividend  equals 97 

Mr.   Syndicate   then   gels   credits   in   dividends   on   $1,000.00 — 

$39.00=:$961.00  and  dividend  equals 24  03 

$50  00 

1311] 


CHAPTER  XXI. 

The  rebate   not   being  allowed  tlie   first  year   did  not  enter  into 
tlie   calculation. 

Then  at  the  end  of  year  the  financial  statement  would  be: 

Interest   received    $62  40 

Borrower   received  in  dividends  first  G  months $  0  32 

Borrower  received  in  dividends  second  (5  months 97 

Syndicate  received  in  dividends  first  6  months 24  68 

Syndicate  received  in  dividends  second  t)  months 24  03 

$50  00      50  00 

Total  net  earning  to  building  association  or  clearing  house... $12  40 

The  above  demonstrates  our  contention. 
At  the  beginning  of  the  year  the  clearing  house  still  had 
$1,000.00,  but  now  $52.00  belongs  as  a  credit  to  Mr.  Bor- 
rower and  only  $948.00  to  original  syndicate  capital ;  the 
$52.00  of  original  syndicate  capital  is  now  placed  else- 
where in  loans.  But  we  must  show  a  distribution  of  interest 

earned  on  $1,000.00  by  the  clearing  house  or $62  40 

In  the  first  place  Mr.  Borrower  now  gets  6%  rebate  on  $52.00 

instead  of  5%  for  the  year,  amounting  to $  3  12 

He  then  gets   6  months   dividend  on   $13.00 32 

He  then  gets  second  6  months  dividends  on  $39.00. . .         97 
Syndicate      then      gets      6      months      dividends      on 

'  $948.00— $13.00=$935.00    23  38 

SjTidicate   then    gets    second    6   months    dividend   on 

$948.00— $39.00=4909.00    22  73 

$52  52      50  52 

Total  net  earnings  end  second  year $11  88 

Third  year,    interest   due   clearing  house $62  40 

Rebate    to    borrower $  6  24 

First  6  months'  dividend 32 

Second    6    months'    dividend 97 

Dividend   to    syndicate    first   6   months   on   $896.00 — 

$13.00=$883.00    22  08 

Dividend  to  syndicate  second  6  months  on  $896.00 — 

$39.00=$857.00   21  43 

Total  allowances    $51  04      51  04 

Third   year    total    net   earning $11  36 

[312J 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

And  so  the  earnings  will  continue  to  decrease  in  proportion  as 
the  balance  due  the  association  decreases,  as  shown  in  trapezoids 
L,  M.  N. 

If  the  annual  profits  on  a  loan  of  $1,000.00,  as  shown  above,  are 
so  small,  and  grow  smaller  from  year  to  year,  the  question  naturally 
arises,  where  does  the  association  get  its  money  to  pay  expenses,  etc. 
While  the  above  shows  what  is  taking  place  in  regards  to  the  profits 
on  loans,  it  must  be  borne  in  mind  that  the  association  does  not  keep 
money  idle,  and  that  the  ^52.00  returned  each  year  is  immediately 
loaned  out  to  some  other  borrower,  so  that  the  association  is  always 
receiving  approximately  the  profit  of  $12.40  per  thousand  on  out- 
standing mortgage  loans,  as  shown  the  first  year  above,  or  simplj' 
the  difference  between  the  interest  it  charges,  of  $62.40  per  thousand 
and  the  5%  dividends  it  allows  its  members  for  the  use  of  its  money. 
This  shows  in  a  most  emphatic  manner  the  mutuality  and  great 
beneficence  of  the  building  associations  of  this  country. 

SOURCES    OF   PROFIT. 

If  this,  however,  was  the  only  source  of  profit,  the  associations 
would  scarcely  be  able  to  pay  their  way  and  continue  in  existence. 
There  are  a  number  of  other  sources  of  small  profits. 

1st.  Some  associations  charge  initiation  fees  (although  it  is 
almost  entirely  abolished  by  associations  in  Ohio),  and  this  is  all 
profit. 

2d.     There  is  a  small  profit  made  on  pass-books. 

3d.  A  premium  was  formerly  charged  for  the  preference  in  ob- 
taining a  loan,  or  as  a  settled  policy  of  the  management  of  the  asso- 
ciation, which  is  another  small  source  of  profit  where  that  practice 
still  prevails. 

4th.  There  is  what  is  called,  in  insurance  parlance,  the  lapse 
element.  Members  draw  out  their  dues  from  week  to  week  and 
get  no  dividends  on  them. 

5th.  Most  associations  levy  fines  of  5  or  10  cents  per  share 
for  delinquency  of  payments,  some  associations  limiting  this  charge 
to  borrowers  only. 

6th.  Many  associations  now  have  large  reserves  and  undivided 
profit  funds,  which,  of  course,  are  not  idle,  and  the  full  earnings 
per  year  per  thousand  is  all  profit  on  these. 


[313] 


CHAPTER  XXI. 

DECLARING  2]^%  DIVIDENDS   SEMI-ANNUALLY. 

Prepared  by  W.  H.  Jones,  Public  Accountant,  Cincinnati,  O. 

In  the  Report  of  the  Ohio  State  Inspector  of  Building  Associa- 
tions for  the  year  1909,  on  page  12,  under  heading  "Miscellaneous 
Information,"   will  be   found   the   following: 

"Average  rate  of  dividend  declared  by  all  associations  in 
Ohio,   5.367o" 

This  indicates  that  the  vast  majority  of  the  Ohio  associations  do 
not  pay  more  than  5%  dividends. 

EXPLANATION. 

The  following  method  of  declaring  a  5%,  or  rather  a  semi-annual 
dividend  of  2^%,  is  used  by  one  of  our  leading  secretaries,  to  wit: 
2H%  reduced  to  a  decimal  is  2.5%.  To  remove  the  decimal  we 
should  have  to  multiply  it  by  10,  which  would  then  give  25% 
(twenty-five  per  cent).  It  is  apparent  and  well  known  that  25%  is 
one-fourth,  but  it  is  not  so  apparent  or  well  known  that  2.5%  is  one- 
fortieth,  or  the  same  number  (4),  as  a  divisor,  with  a  cipher  to  the 
right  (40).  Now  if  one  wanted  to  know  what  25%  of  $400.00 
amounted  to  it  would  only  be  necessary  to  divide  the  $400.00  by  4 
and  the  result  obtained  would  be  $100.00. 

Suppose  we  take  a  larger  amount,  say  $864.00,  and  perform  the 
operation  by  this  short  method:  4)864     You  will  note  that  we  get 

'"2l6 
the  answer  by  placing  the  quotient  directly  under  the  figures  which 
are  divided  by  the  divisor,  4.     Now  in  order  to  divide  by  40  to  get 
254%  we  simply  ignore  the  cipher  and  divide  by  4,  but  place  the 
answer  one  place  to  the  right,  so  40)864.00  or  by  cancelling  one 

~2T.60 
cipher  in  each — the  divisor  and  dividend — we  get  4)86.40 

2L60 

It  will  therefore  be  seen  that  after  a  secretary  has  figured  out 
and  extended  the  averages  for  each  member  in  his  dividend  book 
(there  will  not  be  any  cents  in  the  averages,  the  unit  dollars  being 
the  last  figure  on  the  right)  it  will  only  be  necessary  to  begin  at 
the  top  and  divide  each  amount  by  4  and  carefully  place  the  quotient 
one  place  to  the   right,   as   shown  above. 

By  this  method  a  page  of  fifty  accounts  may  be  calculated  and 
extended  in  fifteen  minutes  after  you  become  thoroughly  familiar 
with  it.  All  that  is  required  is  accuracy  in  dividing  by  4,  and  care 
in  placing  the  answer  in  the  right  position  for  dollars  and  cents  in 
the  "Total  for  Dividend"  column. 

[3141 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

To  verify  add  the  total  column  of  averages  and  the  total  dividend 
column.  Divide  the  former  total  by  4  and  you  should  get  the  latter 
(when  correct).  If  they  do  not  agree  within  a  few  cents  you  will 
find  that  it  is  because  you  have  odd  unit  dollar  figures  in  your  aver- 
ages, where  you  dropped  a  half  cent  in  the  dividends.  Run  your 
eye  up  the  unit  column  of  averages  and  count  the  number  of  them 
(not  the  sum  of  them)  and  divide  this  number  by  2;  if  the  answer  is 
even  you  will  obtain  the  exact  difference  in  your  footing;  if  you 
get  an  odd  number  after  dividing  by  2  your  answer  will  be  the  exact 
difference  within  a  half  cent.  If  it  does  not  prove  in  this  manner 
you  have  made  an  error  somewhere. 

Take  the  following  illustration: 

The  first  column  of  figures  below  represents  your  averages 
entitled  to  dividend,  the  second  column  the  amount  of  the  dividend. 
Divide  the  former  by  4  and  you  see  the  results  in  the  latter  and  just 
how  they  should  be  placed  as  explained  above. 

Averages 

entitled  Total 

to  Div'd  Div'ds 

$28.00  $0.70 

14.00  .35 

12.00  .30 

27.00*  .67 

86.00  2.15 

95.00*  2.37 

140.00  3.50 

260.00  6.50 

385.00*  9.62 

490.00  12.25 

1,000.00  25.00 

36.00  .90 

13.00*  .32 

26.00  .65 

52.00  1.30 


4)12,664.00  $66.58 

66.60 

*Shows  four  odd  unit  figures  in  your  averages.  Divide  4  by  2 
(^^  cent  difference  on  each  one)  and  you  get  2,  which  is  the  2  cents 
difference  between  your  total  footing  for  dividends  and  your 
quotient  after  dividing  total  of  averages  by  4. 


[315] 


CHAPTER  XXI. 


PERPETUAL  WEEKLY  CALENDAR. 
HOW  TO  MAKE  IT. 

How  to  find  the  number  of  weeks  between  two  given  dates  on 
the  same  day  of  the  week. 


1922 

1923 

1924 

: — 1 

Jan. 

1 

2 

3 

4 

5 

6 

7 

1 

Jan. 

31 

1 

2 

3 

4 

5 

6 

53 

Jan. 

30 

31 

1 

2 

3 

4 

5 

105 

8 

9 

10 

11 

12 

13 

14 

2 

7 

8 

9 

10 

11 

12 

13 

54 

6 

7 

8 

9 

10 

11 

12 

106 

15 

16 

17 

IS 

19 

20 

21 

3 

14 

15 

16 

17 

18 

19 

20 

65 

13 

14 

15 

16117 

18 

19 

107 

22 

23 

24 

25 

26 

27 

28 

4 

21 

22 

23 

24 

25 

26 

27 

66 

20 

21 

22 

23|24 

25 

26 

108 

Feb. 

29 

30 

31 

1 

2 

3 

4 

5 

Feb. 

28 

29 

30 

31 

1 

2 

3 

67 

Feb. 

27 

28 

29 

30181 

1 

2 

109 

5 

6 

7 

8 

9 

10 

11 

6 

4 

5 

6 

7 

8 

9 

10 

58 

3|  41  6 

6|  7 

8 

9 

110 

12 

13 

14 

15 

16 

17 

IS 

7 

11 

12 

13 

14 

15 

16 

17 

59 

10 

11 

12 

13  14 

15 

16 

111 

19 

20 

21 

22 

23 

24 

25 

8 

18 

19 

20 

21 

22 

23 

24 

60 

17 

18 

19 

20  21 

22 

23 

112 

Mar. 

26 

27 

28 

1 

2 

3 

4 

9 

Mar. 

25 

26 

27|28 

1 

2 

3 

61 

Mar. 

24 

25 

26 

27  28 

29 

1 

118 

5 

6 

7 

8 

9 

10 

11 

10 

4 

5 

6  7 

8 

9 

10 

62 

2 

3 

4 

5 

6 

7 

8 

114 

12 

13 

14 

15 

16 

17 

18 

11 

11 

12 

13  14 

15 

16 

17 

63 

9 

10 

11 

12 

13 

14 

15 

116 

19 

20 

21|22  23 

24 

25 

12 

IS 

19 

20  21 

22 

23 

24 

64 

16 

17 

18 

19 

20 

21 

22 

116 

Apr. 

26 

27 

28  29  30 

31 

1 

13 

25 

26 

27  28 

29 

30 

31 

65 

23|24|25 

26 

27 

28 

29 

117 

2 

3 

4  5  6 

7 

8 

14 

Apr. 

1 

2 

3 

4 

5 

6 

7 

66 

Apr. 

30|31|  1 

2 

3 

4 

5 

118 

9 

10 

11  12  13 

14 

15 

15 

8 

9 

10 

11 

12 

13 

14 

67 

6 

7 

8 

9 

10 

11 

12 

119 

16 

17 

18|19" 

'20 

21 

22 

16 

15 

16 

17 

18 

19  20 

21 

68 

13 

14 

15 

16 

17 

18 

19 

120 

2.S 

24 

25 

26 

27 

28 

29 

17 

22 

23 

24 

25 

20 

27 

28 

69 

20 

21 

22 

23 

24 

25 

26 

121 

May 

30 

1 

2 

3 

4 

5 

6 

18 

May 

29 

30 

1 

2 

3 

4 

5 

70 

May 

27 

28 

29 

30 

1 

2 

3 

122 

7 

8 

9 

10 

11 

12 

13 

19 

6 

7 

8 

9 

10 

11 

12 

71 

4 

5 

6 

7 

8 

9 

10 

123 

14 

15 

16 

17 

18 

19 

20 

20 

13 

14 

15 

16 

17 

18 

19 

72 

11 

12 

13 

14 

15 

16 

17 

124 

21 

22 

23 

24 

25 

26 

27 

21 

20|21|22 

23 

24 

25 

26 

73 

18 

19 

20 

21 

22 

23 

24 

126 

June 

28 

29 

30 

31 

1 

2 

3 

22 

June 

27|28|29130 

31 

1 

2 

74 

25 

26 

27 

28 

29 

30 

31 

126 

4 

5 

6 

8 

9 

10 

23 

1  3!  41  51  6 

7 

8 

9 

75 

June 

11  2 

3 

4 

5 

6 

7 

127 

11 

12 

13 

14 

15 

16 

17 

24 

10 

11|12|13 

14 

15 

16 

76 

8 

9 

10 

11 

12 

13 

14 

128 

18 

19 

20 

21 

22 

23 

24 

25 

17 

18 

19  20 

21 

22 

23 

77 

15 

16 

17 

18 

19 

20 

21 

129 

July. 

25 

26 

27 

28 

29 

30 

1 

26 

24 

25 

26  27 

28 

29 

30 

78 

22 

23 

24 

25 

26 

27 

28 

130 

2 

3 

4 

5 

6 

7 

8 

27 

July. 

1 

2 

3  4 

5 

6 

7 

79 

July. 

29 

30 

1 

2 

3 

4 

5 

131 

9 

10 

11 

12 

13 

14 

15 

28 

8 

9 

10  11 

12 

13 

14 

80 

6 

7 

8 

9 

10 

11 

12 

132 

16 

17 

18 

19 

20 

21 

22 

29 

15 

16 

17 

18 

19 

20 

21 

81 

IS 

14 

15 

16|17 

18 

19 

133 

23 

24 

25 

26 

27 

28 

29 

30 

22 

23 

24 

25 

26 

27 

28 

82 

20 

21 

22 

23|24 

26 

26 

134 

Aug. 

30 

31 

1 

2 

3 

4 

5 

31 

Aug. 

29 

30 

31 

1 

2 

3 

4 

83 

Aug.|27l28|29 
1  3  41  .5] 

30  31 

1 

2 

185 

6 

7 

8 

9  10 

11  12 

32 

5 

6 

7 

8 

9 

10 

11 

84 

6  7 

8 

9 

136 

13 

14 

15 

16  17 

18  19 

33 

12 

13 

14 

15 

16 

17 

18 

85 

110 

11 

12 

13)14 

15 

16 

137 

20 

21 

22 

23  24 

25  26 

34 

19 

20 

21 

22 

23  24 

25 

86 

17 

18 

19 

20121 

22 

23 

138 

Sep.  [27 

28 

29 

30  31 

11  2 

35 

Sep. 

26 

27  28 

291 

30|31|  1 

87 

24 

25 

26 

27128 

29 

30 

189 

3 

4 

5 

6  7 

81  9 

36 

2 

8 

4 

5 

6 

7 

8 

88 

Sep. 

31 

1 

2 

31  4 

5 

6 

140 

10 

11 

12 

13114 

15 

16 

37 

9 

10 

11 

12 

13 

14 

15 

89 

7 

8 

9 

lOlll 

12 

13 

141 

17 

18 

19 

20121 

22 

23 

38 

16 

17 

18 

19 

20 

21 

22 

90 

14 

15 

16 

17  18 

19 

20 

142 

24 

25 

26 

27128 

29 

30 

39 

23 

24 

25 

26 

27 

28 

29 

91 

21122 

23 

24  25 

26 

27 

143 

Oct. 

1 

2 

3 

4 

5 

6 

7 

40 

Oct. 

30|  1 

21  3 

4 

5 

6 

92 

Oct.  28129 

30 

1  2 

3 

4 

144 

8 

9 

10' 

11 

12 

13 

14 

41 

7  8 

9  10 

11 

12 

13 

93 

5|  61 

7 

8  9 

10 

11 

146 

15 

16 

17 

18 

19 

20 

21 

42 

14  15 

16  17 

18 

19 

20 

94 

12113114 

15  16 

17 

18 

146 

22 

23 

24 

25 

26 

27 

2S 

43 

21  22 

23  24 

25 

26 

27 

95 

19120121 

22  23 

24 

25 

147 

Nov. 

29 

30 

31 

1 

2 

;l 

4 

44 

Nov. 

28)29 

30131 

1 

2 

3 

96 

Nov.  126 

27 

28 

29130 

31 

1 

148 

6 

6 

7 

8 

9 

10 

11 

45 

4  5 

6|  7 

8 

9 

10 

97 

2 

3 

4 

51  6 

7 

8 

149 

12 

13 

14 

15 

16 

17 

18 

46 

11  12 

13  14 

15 

16 

17 

98 

9 

10 

11 

12|13 

14 

15 

150 

19 

20 

21 

22 

23 

24 

25 

47 

18  19 

20  21 

22 

23 

24 

99 

16 

17 

18 

19120 

21 

22 

161 

Dec. 

26 

27 

28 

29 

30 

1 

2 

48 

Dec.  25 

26 

27  28 

29 

30 

1 

100 

23 

24 

25 

26|27 

28 

29 

152 

3 

4 

5 

6 

7 

8 

9 

49 

2 

3 

4  5 

6 

7 

8 

101 

Dec.  30 

1 

2 

31  4 

5  6 

158 

10 

11 

12 

18 

14 

15 

16 

50 

9 

10 

11  12 

13  14 

15 

102 

71  8 

9| 

lOfll 

12  18 

164 

17 

18 

19 

20 

21 

22 

23 

61 

16 

17 

18  19 

20  21 

22 

103 

14  16 

16 

17118 

19  20 

166 

24 

25 

26 

1 

28 

29 

_ 

30 

52 

23 

24 

25  26 

27  28 

29 

104 

21  22 

23 

24|25  26127 
1     1   1 

166 

( 


[3161 


REBATE  AND  COMPOUND  INTEREST  TABLES. 

This  calendar  is  a  sample  page  for  three  years — 1922-'23-'24 — 
showing  how  it  may  be  constructed,  for  an  indefinite  number  of 
years,  to  give  the  dates  by  the  week,  and  have  them  numbered  con- 
secutively. If  the  weekly  meeting  starts  on  January  2,  1922,  then 
the  dates  for  each  week,  for  52  weeks,  down  to  December  25th,  are 
shown  in  the  second  column,  and  their  numerical  consecutive  order 
in  the  eighth  column,  1  to  52. 

Each  of  the  seven  columns  of  dates  show,  in  the  same  way,  the 
weekly  meetings  according  to  the  different  dates  of  starting,  as 
shown  in  the  first  seven  days  of  January. 

If  you  do  not  wish  to  keep  it  for  any  other  dates  except  the  one 
for  your  individual  requirements,  then  you  need  only  make  it  with 
one   column   of   weekly   dates. 

If  you  want  to  start  with  the  first  meeting  of  your  association, 
then  all  you  have  to  do  is  to  get  a  perpetual  calendar  of  regular 
form,  covering  a  period  of  50  or  more  years,  with  index  numbers  for 
the  years,  and  prepare  the  series  of  years  in  the  manner  shown, 
beginning  number  one  with  the  date  of  your  first  meeting,  and  then 
continue  it  from  year  to  year,  or  extend  it  for  a  period  of  years 
in  advance.  (A  perpetual  calendar  such  as  referred  to  above  fol- 
lows on  next  few  pages.) 

Such  a  calendar  enables  the  secretary  to  ascertain  the  number 
of  meetings  between  any  two  dates  a  member  should  have  paid 
dues,  and  the  amount.  For  instance :  suppose  a  borrower  starts 
on  January  16,  1922,  and  you  want  to  ascertain,  on  December  4,  1922, 
both  dates  inclusive,  what  he  owes,  or  should  have  paid.  You  look 
to  the  right  opposite  December  4th,  and  you  find  No.  49  in  the 
numerical  column,  and  opposite  January  1(5,  1922,  you  find  No.  3  in 
the  same  manner.  Now  in  order  to  include  the  meeting  of  January 
lt)th  you  must  either  take  the  number  directly  preceding,  which 
would  be  2,  or  always  subtract  1  from  the  numl>er  opposite  the 
date  of  beginning,  thus,  3 — 1=2.  Now  subtract  2  from  49,  or 
49 — 2=47,  and  you  get  the  total  number  of  meetings  he  should  have 
paid.  If  you  wished  to  find  the  lapsed  time  for  which  interest 
was  due,  instead  of  the  number  of  weeks  dues  should  have  been 
paid,  then  you  take  the  exact  numbers  opposite  the  dates  between 
which  you  want  to  ascertain  the  number  of  weeks  interest  should 
have  been  paid,  to  wit :     49 — 3=4(5  weeks  for  interest. 

When  an  association  has  advanced  pretty  well  along  in  years  you 
will  readily  sec  'how  very  valuable  and  useful,  for  quick  results  in 
calculation,  such  a  consecutive  numerical  order  of  meetings  becomes. 

[317] 


CHAPTER  XXI. 


DIRKCTIONS — Find  the  year  wanted  in  the  Index  below.  The  number 
oppoaitc  i«  the  number  of  the  calendar  for  that  year,  which  will  be  found  in 
one  •£  the  following  panels. 


YEAK 

NO. 

YEAR 

18M... 

...10 

1876 

1857. .. 

...  6 

1877 

1858... 

...6 

1878 

1850. . 

.  ..  7 

1879 

1860. .. 

...8 

1880 

1801. .  . 

.  ..  S 

1881 

1888... 

...    i 

1882 

186$... 

...5 

1888 

186*... 

...18 

1884 

186G... 

.  ..  1 

1885 

1860... 

...2 

1886 

1867. . 

...3 

1867 

186^.. 

...11 

1888 

186V.. 

...6 

1889 

1870. . 

...  7 

1890 

1871. . 

...  1 

1801 

1872 . . 

...  9 

1892 

1873.. 

...  4 

1898 

1874 . . 

...  5 

1894 

1875.. 

...  6 

189f. 

NO. 

.  .14 


.  6 
.  7 
.  8 
.  8 
.  4 
.  5 
.13 
.  1 
.  2 
.   3 


YEAR 

NO. 

YEAR 

NO. 

YEAR 

NO. 

1896 . . . 

...11 

1916. . . 

...14 

1086. .. 

...11 

1897  .  . 

...6 

1917  .  .  . 

..  .  2 

1987.  .  . 

...  6 

1898.  . 

...7 

1918.  .. 

.  ..  8 

1988.  .. 

...7 

189('.  .  . 

...  1 

1919.  .. 

.  ..  4 

1989.  .. 

...  1 

lOOC .  .  . 

...2 

1920.  .. 

...18 

1940. . . 

...  » 

1901... 

...3 

1921.  .. 

...7 

1941.  .  . 

...4 

100;:.  . 

.  ..  4 

1922 , .  . 

.  ..  1 

1942... 

...  S 

1903. . 

.  ..  6 

1923.  .. 

.  ..  2 

1948.  . 

.  ..  6 

1904  . . 

...18 

1924.  .. 

...10 

1944.  . 

.  ..14 

1905.  ., 

...  1 

1925.  . 

...  5 

1045.. 

.  ..  2 

1900.  . 

...2 

1926.  . 

.  ..  6 

1946.  . 

...8 

1907.. 

.  ..  3 

1927.  . 

.  ..  7 

1917. . 

...  4 

1906.  .  . 

...11 

1928.  . 

...8 

1948.  . 

...12 

1909 .  . 

...6 

1939. . 

...  3 

1949.. 

...  7 

1910.  . 

...  7 

1980. . 

...  4 

1950.  . 

..  1 

1911.  . 

...  1 

1931.  . 

...  6 

1951.  . 

...  2 

1912.  . 

...  9 

1982.  . 

...13 

1953  .  . 

...10 

lOlD . . 

...  4 

1933.  . 

...  1 

1053.. 

...  6 

lOl'S.  . 

...  6 

1934. . 

...  2 

1954.. 

...  6 

1915.. 

...  6 

1986. . 

...  8 

195.'i.  . 

...  7 

Ju. 

Feb. 
Ktr. 

Jmi 


7 

n  12 13 14 

HIIO  •20121 
25  26  27IM 


8  M  TWT  F  8 


a 

8l  9 

1.5116 
22ta 


12  13  14 

1» 

26  27  28 


18  18 
25  28 


le 

23 


9 

IC 

2212.1 


Jalj 


27  281 


Od 


Sor. 


Dae. 


8  M  T  vy  T  F  8 


$67 
12  13  14 

19  20  21 
26Wlffl 


£   3 


11  12 
1«  19 
25l2« 


25  28Z718  2B 


"ne  yean  for  which  this  Calendar  Maada 
ere  found  in  the  Index. 


[318] 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


3 


8  M  T  w|TF  8 


9  10,11  1213 
16;  17  18  19  20 

:3':4  25^26  27 
2»,30|21 

"S  '6  "71  8|  9|10 
„  l-2J13!l4|15'16 
,13  19'20]21  22I23-. 

26)26  piajiislaalsi 
"zl'i 

SJ  9^10jll|l2ll3 

1^119120 

2o26  27 


tte  jean  for  which  this  Calendar  Btands. 
are  found  in  the  Index. 


1 

8 

M 

T 

W 

T 

F 

i 

8 

M 

T 

w!t 

7a 

1 

2 

3 

4! 

Jolj 

I 

2^  ^   4!  fill 

5 

fl 

7 

H 

9 

inn 

u 

7 

a  9110 

11  121 

1?  13 

14 

15 

!fll7 

w 

i;j 

14  I.> 

Ifil7 

Ifi 

19 

19  ?n 

21  22i23;24 

■a 

2021122 

2324 

25 

26, 

;2G  '*! 

28  29I3J.3! 

27  2,S 

29  ;xi  31 

u 

r" 

1 

Auf. 

1 

2| 

2   3 

4 

5 

« 

7 

H 

3 

4 

5   6  7 

i 

"1 

9  in 

11 

12 

13 

14 

15 

10 

11 

12  13  14 

15 

ml 

1«17 

1ft 

19 

■A1 

21 

r.>. 

17 

IH 

19  20  21 

22  201 

Hor 

23  21 

26 

26 

27 

23 

"1 

l24 
31 

25 

26  27  23  29 

!" 

2 

3 

4 

fi 

6 

7    « 

isept 

I 

2   3   4    5 

fi! 

9 

M 

11 

12  IS 

14  ir, 

V 

h 

9i>0  11  12 

Ifi 

17 

IS 

1920'2li2-2 

141 1.S 

16|1-  J8  19 

■m; 

23 

1A 

2r> 

2a  27t28r29 

21 2-: 

23,24  25)26 

•'\ 

April 

30 

31 

1 

"2 

.1 

4    S 

Act. 

2»'29 

liO 

1 

2   3 

4 

fi 

7 

« 

S 

Ifl 

11  12 

.■.    fi 

7|  H 

9  1« 

13 

M 

IS 

Ifi 

n 

If!  19 

12  111 

14!l5 

Ifi  17 

IK 

ml'^n 

m 

23 

24 

2S 

26 

19  20121 122|23|24 

■£> 

71 

W 

■a 

:w 

Hot. 

'iR'ln 

2S2a3C 

31 

Ha, 

1 

2 

3 

......... 

-;• 

1 

A 

fi 

ft 

7 

p 

ii 

10 

2    3 

4 

M  6 

7 

H 

11 

l?ltti 

14 

15 

Ifi 

17 

!)  1(J 

11 

12113114 

If 

191-.5C 

21 

■a 

23 'il 

16  17 

n 

1920 

21  2J' 

25 

28 

27 

28 

28 

■■ica. 

'^';jA 

2o 

26 

•7 

28|29j 

JSM 

T 

"? 

"s 

1 

'fi 

■fil 

Dee. 

30 

1 

"2 

3 

'4 

■5 

ti| 

f 

9 

m 

11 

1? 

13  14 

; 

f 

9110 

11 

12 

I'i 

1.S 

If 

n 

If 

U 

7/121 

14 

)h 

Ifi  I7jlf 

19 

2-)' 

22 

?ai?^ 

2r> 

26j27|28 

21 

22 

23  24  20 

26 

27 

29p|... 

28J29 

30  31  ... 

~ 

•" 

The  years  for  which  thts  Calendar  stands 

are  fonnd  In^e  Index. 

6 


The  year*  for  wMch  this  Calendar  st&nda 
are  fofand  In  the  Index. 


The  years  for  which  thl»  Calendar  BtondH 
arc  fonnd  In  tho  Index. 


(Ifll 


CHAPTER  XXI. 


8  M  T  W  T 


I'-.  17  in  1 


«  i  81  » 


13  M 

ao'zi 

27i2S 


IS  16 

12  23 
2S|30 


fi  3 
9110 
16117 
23  24 

3031 


•J  il  J-JJ 


12  131 H 
19  20(21 
26  27  28 


lB20l21|22;23|24iJ5 
28  27i2S:2a  30  ...L. 


4«g 


8epL 


Od 


Dee. 


8  MT  W  T  f  8 


4  15 


13  H 
2021 

27  28 


5 

12 

1819 


The 


yeais  for  nblch  thts  Calendar  etanda 
ore  found  in  the  Index. 


Ju. 


Pel. 


In. 


April 


"»J 


Jbim 


8  M  T  W  T  f|8 

7 
IS  M 
20  21 

27ri8 


1011 
17;  18 


Jul; 


Aug. 


Sept 


Oct 


Bw, 


Dee. 


8  M  T  W  T  F  8 


The  j-ears  for  ■which  this  Calendar  st&nda 
are  found  in  the  Index. 


9 


Jan. 
Feb. 
Jbx. 

April 
Jose 


8  M  T  W  T  f  8 


16 

23 

29  30 


1213 
19  20 
128  27 


ni2 

16  19 
25 


u  e 

12  13 


12{13J14 
1920 


W  T 


10,11 

17  18 
2125 


6 
12  13 

19' 
26  27 


10  11 

1718 
24125 


The  years  for  which  this  Calendar  stands 
erp  found  In  the  Index. 


10 


Jai. 
fekj 
Iv. 

April 


8  M  T  W  T  F  8 


6   7    8 
14  15 

!12i 


11  li 

K  19 
25  26 


3 
9110 
10  17 
23*24 


Jolj 


Sept 


Oct 


Hot. 


Dee. 


8  M  TW  T  F  8 


12  U 

19(20 
26 


IT  13 

20 


2   3   4 
lOJU 

17118 
24  2S 


The  years  for  which  this  Calendar  etmuto 
Bjre  found  In  tbe  Index. | 


[3201 


REBATE  AND  COMPOUND  INTEREST  TABLES. 


11 

S 

M  T 

W  T  F  8 

8  M  T  W 

T  F  8 

hi. 

"s 

■fi  '7 

12    3    4 

8    9  10  11' 

Jdj 

1 

5    6    7    8 

2    3    4  1 
9  10  11  1 

12  13  H 

15  16  17 

ih: 

1213  14  lS116|17;i(i 

19,20  a  22123  W 

25 

19;.Xi'2l'22'23  24  25, 

2C  27  28  29J30|31 

2CJ27  28  29  30  31  ..  | 

Feb. 

1 

8' 

An?. 

1  1 

?    * 

4 

t    6   7 

2    3    4    8    6  '7 

S 

9  in 

n 

12  13'l4|l5l 

9  10  11  12  13  14  IS 

16  17 

m 

l»]20J21i22] 

1617,18  l!120:2r22 

•aiA 

2t> 

26,27l28:29l 

23  24  25  26  27  28.29 

Iv 

...i 
7 

Sept. 

30,31  ... 

1  i 

3 

4 

S    C 

......    12   8    4    6 

fl   9 

iniii 

1213:14 

6   7   S   9  10  11  12 

19  16 

17.18 

19:20211 

I3I14  15  16ll7  18  1<J 

22*23  24  2Si26,27  "H 

20  2i:22''23  24  25  26 

21(30  31 

27:28,23,30 

Iftil 

::C  ..    1    2   3   4 

Ud 

............    I    2    8 

S|  8   7   8   9^10  11 

.  4:  51  61  7i  8|  9il0|| 

12  13  14  I5  16ll7:i8 

11  12  13;i4,15IBll7 

19  28  21  2:23  24 

•a 

18  1<fa;21  22i23  24 

26,27  28:29  30... 

25  20  27  2S  29  30  31 

ll»J 

1        1 

•i, 
9 

Hot. 

31  4    8    el  7    » 

12    3    4    5    6 

•>\\ 

10  11  12  13  14  1516 

8   5  10  11  12  13  1411 

17;  18  19  20  21  22  23 

IS  16  17118  1920  21 II 

2*  2S;28'27.21(  29,X 

22  23  24  28  26:27 

281 

Ja» 

31 

Dec 

29  30 1... 

i  2  3  4  e  6 

12   3    4 

5 

7l  el  9iio!n|reIi3 

6    7    8    910  U 

12 

Misisniislma) 

13  14  1.^  16  17  18 

21;22t23  24,2J|26|27 

20  21  22;  23  24  25 

2<J 

26;29|30|..|._|...|.,. 

27  28  2»iM  31  „. 

The  yeta  for  which  thU  Calendar  siao< 

Is 

are  fouad  In  the  Index.                 |j 

12 

8  M 

T 

W 

TF8 

8  M  T  \N  T 

F 

s 

Inn 

1    2    3 

Jai; 

I 

2 

3 

4    6 

fi 

7 

8    9J0 

nil2  13 

14  15' 16117 

11  12  13|14  15 

1« 

17 

18!l9'20;21, 22  23,24 

18  13  20,21:22 

■23 

24 

U 

25  28:27  28 

29  30  31 

Aug. 

25 

26  27  28 

29 

30 

31 

12    3    4 

6   6  '7 

1 

2    3    4 

5 

6 

7 

8    9  10  11 

12] 13  14 

8 

910  11 

12 

13 

14 

15  16  17  18 

1920  21 

15 

16  17  18 

19 

20 

21 

22  23iai  25 

26  27  28 

22 

23,24  25 

26 

27 

28 

Bar. 

29 

Sept 

29 

30!31  ... 
......    1 

"2 



1    2 

a 

4    6    6 

3  4j 

7 

S    9 

1(1 

U  12  13 

5 

6   7   8 

9 

lUllj 

14 

If.  16 

17 

18  19  30 

12  13:14:15 

16 

17 

18 

21 

22  2.1 

24 

25  26  27 

19 

2021:22  23  ■24 

25 

"8 

7<i  30 

31 

2« 

27  28|29i30 

April 

Oct 

1 

4 

51  fi 

7 

8    9  10 

3 

4 

6    6 

7 

8 

9 

11 

1?.i:i 

14 

15  16  17 

u: 

11 

12  IJ 

H 

IS 

16 

1? 

I'l  w 

?I 

22'23  24 

17 

It 

19 'A 

•u 

25 

26  27 

28 

29  30  ... 

24 

25 '26  27 

2S 

2t 

30 

Haf 

1 

8 

Not 

31 

1 

2I  3I  4i  6 

6    7 

1    2   ! 

4 

5 

9, 10; 11  12 

13ll4  15 

7 

8   01c 

11 

12  13 

lfiil7  18  19 

20:21  22 

14 

15  16  1; 

18 

2312)^25126 

•27  28 

29 

21 

•22  23  24 

26-27 

Jue 

30  31 

Pet 

1 

"2 

'3r4 

1  2 

3l  4 

5 

6   7|  8|  9110  11 

12 

h 

6   7    8 

( 110,11 

13  14I15I16  17:1s 

111 

12 

13  14  I5'I6il7|18 

20  2i;22i23  24i25,2« 

19!20!21!22:23:24,25 

27;!8  2!lj30...  ...  ... 

26  27  28  29  30|31  ... 

The  years  for  which  this  Calendar  siands 

are  found  In  the  Index. 

13 


Ipnl 


1»J 


Jm 


13  H'l 

•ij  21  22  23  24  25  26 
27,28  29.30,31  _  ._ 
......!......._    1    2 


13^14, i5;i( 

a)2l'22'23 
27':8  2»3» 


10  11,12 
17lU,19 

24<2ft28 


8    »ilU 

I.'S||«{I7 


12|U 


11  12  1314 

W  l»:20l21 

uhuia  28 

1  ■»!  1 
Ri  «',io  n 

u  I«lt7  u 


8  M  T  W  T  F  8 


10  11  12  13  14  IS 

17;i8  19  20l21|22 
24,24.26  27128  28 


8    8  10  11:12 
I4:i5ll6  17  18>  19120 

21  22:23  24|25iS»|27 
28;2»30 


TtM  7C«n  for  which  thli  Calendar  iiand* 
are  found  In  (be  Index. 


14 


Ju. 


t'h. 


Itr. 


13 

2021 

27  28 


Aprfl 


Xij 


Jmie 


t 


8  MITIW  T  f  8 


121314 

19|20'21 

27i-2» 


10!  11112 
16',J7|le!l9 

23i2425;2a 


7    6    9  10 
14ll5  16  17 

21l'22[23  24 
28l2»:30  31 


11:12  13 

1811820 
25  26  27 


Jul) 


hi 


Stpt 


Od. 


Nor, 


Dm. 


8  MIT  WTT  f  8 


10  11 
i7|ie 

241^26 
28|'2U  30.31 


I3il4  15 

20'2ll22 
'28|'29 


910 
10  17 

22|23!'/4i25 
28'30  3r 


9;i0 
4il5  16  17 
21  •22;23124 

28 ha 


12!l3  14'15 

10:2021122 
20(27  28  28 


The  yeftn  for  which  tbli  Calendar  nanda 
are  found  in  the  Index. 


[321] 


CHAPTER  XXII. 

Distribution  of  Earnings— Permanent  Plan. 

Calculation  of  Dividends  and  Interest. 

There  is  a  great  necessity  for  the  utmost  care  in  the 
calculation  and  distribution  of  dividends.  It  has  hap- 
pened that  associations,  on  account  of  carelessness  or  in- 
competency in  this  connection,  have  become  greatly  em- 
barrassed. Great  care  should  be  taken  in  making  the 
calculations  for  the  amounts  available  for  dividends,  so 
that  the  exact  rate  be  established.  Unfortunately,  there 
is  lack  of  uniformity  in  the  calculation  of  dividends  and 
interest,  by  the  various  associations,  which  makes  it  im- 
possible to  give  specific  rules  that  will  apply  to  all  associa- 
tions. Some  of  the  methods  are  cumbersome  and  in  some 
instances  inaccurate,  causing  unnecessary  work  and  vexa- 
tion, which  could  be  avoided  by  the  substitution  of  a 
more  scientific  standard.  The  periodical  calculation  of 
dividends  and  interest  is  the  most  arduous  task  in  the 
regular  routine  of  a  secretary's  work,  and  it  is  to  his  in- 
terest, as  well  as  the  association,  that  he  make  use  of  the 
most  improved  methods. 

A  large  number  of  dividend  and  interest  tables  have 
been  prepared.  Several  of  these  tables  which  are  in  more 
general  use,  and  have  given  good  satisfaction,  are  printed 
herewith.  They  will  be  very  valuable  for  use  in  those 
associations  following  the  same  plan  upon  which  the 
tables  are  based. 

[322] 


DISTRIBUTION  OF  EARNINGS. 

A^lJcation  of  Profits. 

Profits  should  be  applied  as  follows : 

1.  To  the  payment  of  expenses. 

2.  Such  portion  as  may  be  determined  semi-annually 
or  annually  by  the  board  of  directors,  should  be  set  aside 
as  a  reserve  fund  for  the  payment  of  contingent  losses  in 
conformity  with  the  law. 

3.  Such  portions  as  may  be  determined  semi-annually 
or  annually  by  the  board  of  directors  shall  be  credited  to 
the  account  of  the  members  as  a  dividend,  according  to 
their  average  investment. 

4.  The  residue  may  be  placed  in  an  undivided  profit 
fund  in  conformity  with  the  law. 

PERMANENT  PLAN— SYSTEM   I. 

The  following  tables  and  explanation  are  furnished  by 
Mr.  W.  L.  Davis  and  verified  by  Mr.  Chas.  H.  Stewart. 
EXPLANATION. 

Example  of  the  First  Semi-Annual  Dividend:  A  has  one  share, 
$1.00  weekly  dues.  He  has  paid  for  six  months,  or  twenty-six 
weeks.  The  dividend  declared  is  eight  per  cent  (semi-annual). 
What  is  A's  portion? 

Turn  to  the  8  per  cent  tables  (page  330).  Opposite  26,  the  num- 
ber of  weeks  A  has  paid  $1.00,  you  find  $1.08,  which  is  the  amount 
of  $26.00  at  8  per  cent  for  twenty-six  weeks  upon  the  usual  compu- 
tation of  averages,  or,  in  other  words,  the  proportion  of  dividend 
declared  which  is  due  A. 

Example  of  the  second  and  all  subsequent  dividends:  B  has 
three  shares  (of  $1.00  per  share  dues).  He  has  paid  $402.00.  The 
dividend  declared  is  five  per  cent  (semi-annual).  What  is  B's 
portion? 

Subtract  from  $402.00,  the  amount  he  has  paid  since  the  last 
dividend,  $3.00  per  night  for  twenty-six  weeks,  or  $78.00.  Find  5 
per  cent  of  the  difference,  $324.00;  which  is  $16.00,  or  dividend  upon 
$324.00.  Now  turn  to  the  five  per  cent  tables  (page  327).  Opposite 
26,  the  number  of  weeks  B  has  paid  $3.00  since  the  last  settlement, 
you  find  $2,025  in  the  three-share  column,  which  is  the  amount  of 
dividend  on  $78.00;  now  add  $2,025  to  $10.20.  The  result,  $18,225, 
is  the  amount  of  dividend  due  B  on  $•102.00. 

1323] 


CHAPTER  XXII. 


Shares,  $500. — Dues,  $1.00  per  week. 


TWO  PER  CENT  TABLES. 


No. 

O.NK 

Two 

Three 

Four 

Five 

Weeks 

Shake 

Shares 

Shares 

Shares 

Shares 

1 
O 

1^ 

.012 

3 

.010 

.013 

.020 

.023 

4 

.015 

.023 

.030 

.040 

5 

.011 

.023 

.035 

.046 

.060 

6 

.016 

.032 

.048 

.065 

.081 

7 

.021 

.043 

.065 

.086 

.110 

8 

.027 

.055 

.083 

.110 

.140 

9 

.034 

.069 

.104 

.138 

.173 

10 

.042 

.084 

.128 

.169 

.212 

11 

.050 

.101 

.148 

.203 

.254 

12 

.000 

.120 

.180 

.240 

.300 

13 

.070 

.140 

.210 

.280 

.350 

14 

.080 

.161 

.242 

.323 

.404 

15 

.092 

.185 

.277 

.370 

.462 

16 

.104 

.209 

.814 

.420 

.523 

17 

.117 

.235 

.353 

.470 

.590 

18 

.131 

.263 

.395 

.526 

.660 

19 

.140 

.292 

.438 

.585 

.731 

20 

.161 

.323 

.485 

.646 

.810 

21 

.177 

.355 

.533 

.710 

.890 

22 

.194 

.390 

.584 

.780 

.973 

23 

.212 

.424 

.636 

.850 

1.061 

24 

.230 

.461 

.692 

.923 

1.154 

25 

.250 

.500 

.750 

1.000 

1.250 

26 

.270 

.540 

.810 

1.080 

1.350 

[824] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $500. — Dues,  $1.00  per  week. 


THREE  PER  CENT  TABLES. 


No. 

Onk 

Two 

Thkee 

Four 

Five 

Weeks 

Share 

Shakes 

Shares 

Shares 

Shares 

1 

2 

.011 

.014 

.020 

3 

.014 

.020 

.027 

.034 

4 

.011 

.023 

.034 

.045 

.057 

5 

.017 

.035 

.052 

.070 

.087 

6 

.024 

.048 

.073 

.097 

.121 

7 

.032 

.065 

.097 

.130 

.162 

8 

.041 

.083 

.124 

.165 

.207 

9 

.Ool 

.104 

.155 

.207 

.259 

10 

.063 

.127 

.192 

.254 

.318 

11 

.076 

.152 

.222 

.305 

.381 

12 

.090 

.180 

.270 

.360 

.450 

i:{ 

.105 

.210 

.315 

.420 

.525 

14 

.121 

.242 

.364 

.485 

.606 

15 

.138 

.277 

.415 

.554 

.693 

Itt 

.157 

.314 

.470 

.627 

.784 

17 

.176 

.353 

.529 

.705 

.882 

18 

.197 

.395 

.592 

.790 

.987 

11) 

.210 

.438 

.658 

.877 

1.096 

20 

.242 

.485 

.727 

.970 

1.212 

21 

.266 

.533 

.799 

1.065 

1.332 

22 

.292 

.584 

.875 

1 .  ]  67 

1.459 

23 

.318 

.636 

.955 

1.273 

1.691 

24 

.345 

.692 

1.040 

1.385 

1.721 

25 

.375 

.750 

1.125 

1.500 

1.875 

26 

.410 

.810 

1.215 

1.620 

2.025 

[8251 


CHAPTER  XXll. 


Shares,  $500. — Dues,  $1.00  per  week. 


FOUR  PER  CENT  TABLES. 


No. 

One 

Two 

Threk 

Four 

Five 

Weeks 

Share 

SlIAUES 

Sharks 

Shares 

Shares 

1 

2 

.010 

.014 

.020 

.024 

3 

.018 

.027 

.037 

.046 

4 

.015 

.031 

.045 

.061 

.076 

5 

.023 

.046 

.069 

.093 

.116 

6 

.032 

.065 

.097 

.130 

.162 

7 

.043 

.086 

.129 

.173 

.216 

8 

.055 

.110 

.165 

.221 

.276 

9 

.069 

.140 

.207 

.277 

.346 

10 

.085 

.169 

.255 

.340 

.424 

11 

.101 

.203 

.305 

.406 

.510 

12 

.120 

.240 

.360 

.480 

.600 

13 

.122 

.280 

.420 

.560 

.700 

14 

.161 

.323 

.485 

.646 

.810 

15 

.185 

.370 

.554 

.740 

.924 

16 

.209 

.420 

.627 

.837 

1.046 

17 

.235 

.470 

.705 

.940 

1.176 

18 

.263 

.526 

.790 

1.053 

1.316 

ID 

.292 

.585 

.877 

1.170 

1.462 

20 

.323 

.646 

.970 

1.293 

1.616 

21 

.355 

.710 

1.065 

1.421 

1.776 

22 

.389 

.7.-0 

1.167 

1.557 

1.946 

23 

.424 

.850 

1.273 

1.697 

2.122 

24 

.460 

.923 

1.384 

1.846 

2.310 

25 

.500 

1.000 

1.500 

2.000 

2.500 

26 

.540 

1.080 

1.620 

2.160 

2.700 

[326] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $500.— Dues,  $1.00  per  week. 


FIVE  PER  CENT  TABLES. 


No. 

Onb 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

SUAKKt 

1 

.010 

2 

.012 

.020 

.024 

.030 

3 

.011 

.023 

.034 

.046 

.057 

4 

.020 

.039 

.057 

.076 

.095 

5 

.029 

.058 

.087 

.116 

.145 

6 

.040 

.081 

.121 

.162 

.202 

7 

.054 

.108 

.162 

.215 

.270 

8 

.069 

.140 

.207 

.276 

.345 

9 

.086 

.173 

.260 

.346 

.432 

10 

.106 

.212 

.320 

.424 

.530 

11 

.127 

.254 

.381 

.510 

.635 

12 

.150 

.300 

.450 

.600 

.750 

13 

.175 

.350 

.525 

.700 

.875 

U 

.202 

.404 

.606 

.810 

1.010 

15 

.231 

.462 

.693 

.924 

1.155 

IG 

.261 

.523 

.784 

1.046 

1.307 

17 

.294 

.590 

.882 

1.176 

1.470 

18 

.329 

.660 

.987 

1.316 

1.645 

19 

.365 

.731 

1.096 

1.462 

1.827 

20 

.404 

.810 

1.212 

1.616 

2.020 

21 

,444 

.890 

1.332 

1.776 

2.220 

22 

.486 

.973 

1.460 

1.94(i 

2.432 

23 

.530 

1.061 

1.591 

2.122 

2.652 

24 

.577 

1.154 

1.731 

2.310 

2.885 

25 

.625 

1.250 

1.875 

2.500 

3.125 

26 

.675 

1.350 

2.025 

2.7(X) 

3.376 

[827] 


CHAPTER  XXII. 


Shares,  $500.— Dues,  $1.00  per  week. 


SIX  PER  CENT  TABLES. 


No. 

One 

Two 

Thrke 

Four 

Five 

Weeks 

Share 

SlIAREi< 

Shares 

Sharks 

Sharks 

1 

.012 

2 

.014 

.021 

.030 

.036 

3 

.014 

.028 

.041 

.055 

.070 

4 

.023 

.047 

.068 

.091 

.114 

5 

.035 

.065 

.104 

.140 

.174 

6 

.048 

.097 

.146 

.194 

.243 

7 

.065 

.129 

.194 

.260 

.324 

8 

.083 

.165 

.248 

.331 

.414 

9 

.104 

.207 

.311 

.415 

.520 

10 

.127 

.254 

.383 

.510 

.636 

11 

.152 

.305 

.457 

.610 

.762 

12 

.180 

.360 

.540 

.720 

.900 

13 

.210 

.420 

.630 

.840 

1.050 

14 

.242 

.485 

.727 

.970 

1.212 

15 

.277 

.554 

.830 

1.110 

1.386 

16 

.314 

.627 

.941 

1.255 

1.570 

17 

.353 

.705 

1.058 

1.411 

1.764 

18 

.395 

.789 

1.184 

1.580 

1.974 

19 

.438 

.877 

1.316 

1.754 

2.193 

20 

.485 

.970 

1.454 

1.940 

2.424 

21 

.533 

1.065 

1.598 

2.131 

2.664 

22 

.584 

1.167 

1.800 

2.335 

2.920 

23 

.636 

1.273 

1.910 

2.546 

3.183 

24 

.692 

1,385 

2.077 

2.770 

3.462 

25 

.750 

1.500 

2.250 

3.000 

3.750 

26 

.810 

1.620 

2.430 

3.240 

4.050 

[3281 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $500.— Dues,  $1.00  per  week. 


SEVEN  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Shake 

Shakes 

Shakes 

Shares 

Shares 

1 

.010 

.011 

.014 

2 

.017 

.025 

.033 

.042 

3 

.016 

.032 

.048 

.064 

.080 

4 

.026 

.054 

.080 

.106 

.133 

5 

.040 

.081 

.122 

.162 

.203 

6 

.056 

.113 

.170 

.227 

.283 

7 

.075 

.151 

.227 

.302 

.380 

8 

.096 

.193 

.289 

.886 

.483 

9 

.121 

.242 

.363 

.484 

.605 

10 

.148 

.297 

.447 

.593 

.742 

11 

.178 

.355 

.533 

.711 

.890 

12 

.210 

.420 

.630 

.840 

1.050 

U 

.245 

.490 

.735 

.960 

1.225 

U 

.283 

.565 

.850 

1.151 

1.414 

15 

.323 

.647 

.970 

1.293 

1.617 

16 

.366 

.732 

1.098 

1.464 

1.830 

17 

.411 

.823 

1.235 

1.646 

2.060 

18 

.460 

.921 

1.381 

1.842 

2.303 

19 

.512 

1.023 

1.535 

2.047 

2.560 

20 

.565 

1.131 

1.697 

2.262 

2.830 

21 

.621 

1.243 

1.864 

2.486 

3.110 

22 

.681 

1.362 

2.043 

2.724 

3.405 

23 

.  736 

1.485 

2.230 

2.971 

3.713 

24 

.808 

1.615 

2.423 

3.231 

4.040 

26 

.875 

1.750 

2.625 

3.500 

4.375 

26 

.945 

1.890 

2.835 

3.780 

4.725 

[320] 


CHAPTER  XXll. 


Shares,  $500.— Dues,  $1.00  per  week. 


EIGHT  PER  CENT  TABLES. 


Mo. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shabes 

Shares 

Shares 

Sharks 

1 

.010 

.013 

.016 

2 

.020 

.029 

.040 

.050 

3 

.018 

.037 

.055 

.073 

.092 

4 

.030 

.062 

.091 

.121 

.152 

5 

.046 

.093 

.140 

.185 

.232 

(> 

.065 

.129 

.194 

.260 

.324 

7 

.086 

.173 

.260 

.345 

.432 

8 

.110 

.221 

.331 

.441 

.552 

9 

.138 

.277 

.415 

.553 

.692 

10 

.169 

.340 

.511 

.680 

.850 

11 

.203 

.406 

.610 

.813 

1.016 

12 

.240 

.480 

.720 

.960 

1.200 

13 

.280 

.560 

.840 

1.120 

1.400 

14 

.323 

.646 

.970 

1.293 

1.616 

15 

.369 

.740 

1.108 

1.478 

1.850 

16 

.418 

.837 

1.255 

1.673 

2.092 

17 

.470 

.941 

1.411 

1.881 

2.352 

18 

.526 

1.053 

1.580 

2.105 

2.632 

19 

.585 

1.170 

1.754 

2.340 

2.924 

20 

.646 

1.293 

1.940 

2.585 

3.232 

21 

.710 

1.421 

2.131 

2.841 

3.552 

22 

.778 

1.557 

2.335 

3.113 

3.892 

23 

.856 

1.697 

2.546 

3.395 

4.244 

24 

.923 

1.846 

2.770 

3.693 

4.616 

26 

1.000 

2.000 

3.000 

4.000 

5.000 

26 

1.080 

2.160 

3.240 

4.320 

5.400 

[880] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $500. — Dues,  $1.00  per  week. 


NINE  PER  CENT  TABLES. 


No. 

UNK 

Two 

Three 

Four 

Five 

Weeks 

Shake 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.014 

.020 

2 

.010 

.021 

.032 

.043 

.054 

3 

.020 

.041 

.062 

.083 

.103 

4 

.034 

.070 

.102 

.137 

.171 

5 

.052 

.104 

.156 

.209 

.261 

6 

.073 

.146 

.218 

.291 

.364 

7 

.097 

.194 

.291 

.389 

.486 

8 

.124 

.248 

.372 

.497 

.621 

9 

.155 

.311 

.467 

.623 

.780 

10 

.191 

.381 

.575 

.763 

.954 

11 

.228 

.457 

.686 

.914 

1.143 

12 

.270 

.540 

.810 

1.080 

1.350 

13 

.315 

.630 

.945 

1.260 

1.575 

14 

.363 

.727 

1.090 

1.454 

1.820 

15 

.416 

.831 

1.247 

1.663 

2.080 

16 

.471 

.941 

1.412 

1.8.^3 

2.353 

17 

.529 

1.060 

1.587 

2.117 

2.646 

18 

.592 

1.184 

1.776 

2.370 

2.961 

19 

.658 

1.316 

1.973 

2.631 

3.290 

20 

.727 

1.454 

2.181 

2.909 

3.636 

21 

.799 

1.600 

2.397 

3.197 

3.996 

22 

.876 

1.751 

2.627 

3.503 

4.380 

23 

.955 

1.910 

2..S64 

3.820 

4.770 

24 

1.038 

2.077 

3.116 

4.154 

5.193 

25 

1 .  125 

2.250 

3.375 

4.500 

5.625 

26 

1.215 

2.430 

3.645 

4.860 

6.075 

[3311 


CHAPTER  XXII. 


Shares,  $500. — Dues,  $1.00  per  week. 


TEN  PER  CENT  TABLES. 


No. 

Onk 

Two 

Three 

Four 

Five 

Weeks 

Shake 

Shabks 

Shares 

Shares 

Shakes 

1 

.010 

.012 

.016 

.020 

2 

.012 

.024 

.036 

.050 

.060 

3 

.023 

.046 

.070 

.092 

.115 

4 

.040 

.078 

.114 

.152 

.190 

5 

.060 

.116 

.174 

.232 

.290 

6 

.081 

.162 

.243 

.324 

.405 

7 

.108 

.216 

.324 

.432 

.540 

8 

.138 

.276 

.414 

.552 

.690 

9 

.173 

.346 

.520 

.692 

.865 

10 

.212 

.424 

.640 

.850 

1.060 

11 

.254 

.510 

.762 

1.016 

1.270 

12 

.300 

.600 

.900 

1.200 

1.500 

13 

.350 

.700 

1.050 

1.400 

1.750 

14 

.404 

.810 

1.212 

1.616 

2.020 

15 

.462 

.924 

1.386 

1.850 

2.310 

16 

.523 

1.046 

1.569 

2.092 

2.615 

17 

.590 

1.176 

1.764 

2.352 

2.940 

18 

.660 

1.316 

1.974 

2.632 

3.290 

19 

.731 

1.462 

2.193 

2.924 

3.655 

20 

.810 

1.616 

2.424 

3.232 

4.040 

21 

.890 

1.776 

2.664 

3.552 

4.440 

22 

.973 

1.946 

2.919 

3.892 

4.865 

23 

1.061 

2.122 

3.183 

4.244 

5.305 

24 

1.154 

2.308 

3.462 

4.616 

5.770 

25 

1.250 

2.500 

3.750 

5.000 

6.250 

26 

1.350 

2.700 

4.050 

6.400 

6.750 

[332] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $500.— Dues,  $1.00  per  week. 


ELEVEN  PER  CENT  TABLES. 


No. 

Omb 

Two 

Thbkk 

FOOB 

Five 

Wbkks 

Shabs 

Sharks 

Sharks 

Shakes 

Sharks 

1      1 

.010 

.013 

.020 

.022 

3    1 

.013 

.026 

.040 

.053 

.066 

3    1 

.025 

.050 

.076 

.101 

.126 

4    ' 

.042 

.086 

.125 

.167 

.210 

5    i 

.064 

.127 

.191 

.255 

.320 

6    i 

.089 

.178 

.267 

.356 

.445 

7 

.119 

.237 

.356 

.475 

.594 

8 

.152 

.303 

.455 

.607 

.760 

9 

.190 

.380 

.571 

.761 

.951 

10 

.233 

.466 

.703 

.933 

1.166 

11 

.279 

.560 

.840 

1.117 

1.397 

12 

.330 

.660 

.990 

1.320 

1.650 

13 

.385 

.770 

1.155 

1.540 

1.925 

14 

.444 

.890 

1.333 

1.777 

2.222 

15 

.510 

1.016 

1.524 

2.033 

2.641 

16 

.675 

1.150 

1.726 

2.301 

2.876 

17 

.647 

1.293 

1.940 

2.587 

3.234 

18 

.724 

1.447 

2.171 

2.895 

3.620 

19 

.804 

1.610 

2.412 

3.216 

4.020 

20 

.889 

1.777 

2.666 

3.555 

4.444 

21 

.977 

1.953 

2.930 

3.907 

4.884 

22 

1.070 

2.140 

3.211 

4.281 

5.361 

23 

1.167 

2.334 

3.501 

4.670 

5.835 

24 

1.266 

2.540 

3.810 

5.077 

6.347 

26 

1.375 

2.750 

4.125 

5.500 

6.875 

26 

1.485 

2.970 

4.455 

5.940 

7.425 

\XQ\ 


CHAPTER  XXII. 


Shares,  $500. — Dues,  $1.00  per  week. 


TWELVE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Wkeks 

Share 

SHAUK8 

Shares 

Shares 

Shakes 

1 

.010 

.014 

.020 

.024 

2 

.014 

.030 

.043 

.057 

.072 

3 

.027 

.055 

.083 

.110 

.140 

4 

.045 

.093 

.137 

.182 

.230 

5 

.070 

.139 

.209 

.278 

.350 

6 

.097 

.194 

.291 

.389 

.486 

7 

.130 

.260 

.389 

.520 

.650 

8 

.165 

.331 

.497 

.662 

.830 

9 

.207 

.415 

.623 

.830 

1.040 

10 

.254 

.510 

.767 

1.017 

1.272 

11 

.305 

.609 

.914 

1.220 

1.524 

12 

.360 

.720 

1.080 

1.440 

1.800 

13 

.420 

.840 

1.260 

1.680 

2.100 

14 

.485 

.970 

1.454 

1.940 

2.424 

15 

.554 

1.110 

1.663 

2.217 

2.772 

16 

.627 

1.255 

1.883 

2.510 

3.140 

17 

.705 

1.411 

2.117 

2.822 

3.530 

18 

.790 

1.580 

2.369 

3.160 

3.950 

19 

.877 

1.756 

2.631 

3.510 

4.386 

20 

.970 

1.940 

2.1K)9 

3.880 

4.850 

21 

1.065 

2.131 

3.197 

4.260 

5.330 

22 

1.167 

2.335 

3.503 

4.670 

5.840 

23 

1.273 

2.546 

3.820 

5.093 

6.366 

24 

1.381 

2.770 

4. 154 

5.540 

6.924 

25 

1.500 

3.000 

4.500 

6.000 

7.500 

26 

1.620 

3.240 

4.860 

6.480 

8.100 

[334] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500. — Dues,  50c.  i>er  week. 


TWO  PER  CENT  TABLES. 


No. 

Owe 

Two 

Thiee 

Four 

Five 

Weeks 

Share 

Shakes 

Shares 

Shares 

Shabes_ 

1 

2 

3 

.010 

.010 

4 

.012 

.015 

.020 

6 

.011 

.020 

.023 

.030 

6 

.010 

.016 

.024 

.033 

.040 

7 

.010 

.021 

.033 

.043 

.054 

8 

.013 

.027 

.042 

.055 

.070 

9 

.017 

.034 

.052 

.070 

.086 

10 

.021 

.043 

.064 

.084 

.106 

11 

.026 

.050 

.074 

.101 

.127 

12 

.030 

.060 

.090 

.120 

.150 

13 

.035 

.070 

.105 

.140 

.175 

14 

.041 

.080 

.121 

.161 

.202 

15 

.046 

.093 

.138 

.184 

.232 

16 

.052 

.104 

.157 

.210 

.261 

17 

.053 

.117 

.177 

.235 

.294 

18 

.065 

.131 

.198 

.263 

.329 

19 

.073 

.146 

.220 

.293 

.365 

20 

.080 

.161 

.243 

.323 

.404 

21 

.090 

.177 

.267 

.355 

.444 

22 

.097 

.194 

.292 

.390 

.486 

23 

.101 

.212 

.320 

.424 

.530 

Zi 

.116 

.230 

.346 

.461 

.577 

25 

.125 

.250 

.375 

.500 

.625 

26 

.136 

.270 

.405 

.540 

.675 

ia;)M 


CHAPTER  XXII. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


THREE  PER  CENT  TABLES. 


NO. 

Onk 

Iwo 

Thrke 

Foon 

Five 

WSEKS 

Shark 

SKARSe 

Shakes 

Shares 

Shares 

1 

2 

.010 

3 

.010 

.014 

.017 

4 

.011 

.017 

.022 

.030 

5 

.010 

.018 

.026 

.034 

.043 

6 

.012 

.024 

.037 

.050 

.060 

7 

.016 

.033 

.050 

.064 

.081 

8 

.020 

.042 

.062 

.082 

.103 

9 

.026 

.052 

.077 

.103 

.130 

10 

.031 

.063 

.095 

.127 

.160 

11 

.040 

.076 

.111 

.152 

.190 

12 

.045 

.090 

.135 

.180 

.225 

13 

.052 

.105 

.157 

.210 

.262 

14 

.060 

.121 

.181 

.243 

.303 

15 

.070 

.138 

.207 

.277 

.346 

16 

.080 

.157 

.235 

.313 

.892 

17 

.090 

.177 

.264 

.352 

.441 

18 

.100 

.200 

.296 

.394 

.493 

19 

.104 

.220 

.330 

.440 

.550 

20 

.121 

.243 

.363 

.484 

.606 

21 

.133 

.267 

.400 

.532 

.666 

22 

.146 

.292 

.437 

.583 

.730 

23 

.160 

.320 

.480 

.636 

.795 

24 

.172 

.346 

.520 

.693 

.860 

25 

.187 

.375 

.562 

.750 

.937 

26 

.205 

.408 

.607 

.810 

1.012 

[3361 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500.— Dues,  50c.  per  week. 


FOUR  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

WXKKS 

Share 

Shares 

Sharks 

Shares 

Shasu 

1 

2 

.010 

.012 

3 

.010 

.013 

.020 

.023 

4 

.015 

.022 

.031 

.040 

5 

.011 

.023 

.034 

.047 

.060 

6 

.016 

.033 

.050 

.064 

.081 

7 

.021 

.043 

.064 

.087 

.110 

8 

.022 

.055 

.082 

.111 

.140 

9 

.034 

.069 

.103 

.140 

.173 

10 

.043 

.084 

.127 

.170 

.212 

11 

.050 

.101 

.153 

.203 

.254 

12 

.060 

.120 

.180 

.240 

.300 

13 

.061 

.140 

.210 

.280 

.350 

14 

.080 

.161 

.24.3 

.323 

.404 

15 

.093 

.184 

.277 

.370 

.462 

16 

.104 

.209 

.313 

.420 

.523 

17 

.117 

.235 

.352 

.471 

.590 

18 

.131 

.263 

.400 

.526 

.660 

19 

.146 

.293 

.440 

.584 

.732 

20 

.161 

.323 

.484 

.647 

.810 

21 

.177 

.355 

.532 

.711 

.890 

22 

.194 

.390 

.583 

.780 

.973 

23 

.212 

.425 

.636 

.850 

1.061 

24 

.230 

.461 

.693 

.923 

1.154 

25 

.250 

.500 

.760 

1.000 

1.2G0 

26 

.270 

.540 

.810 

1.080 

1.350 

[337] 


CHAPTER  XXII. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


FIVE  PER  CENT  TABLES. 


No. 

Okk 

Two 

Three 

Four 

FiVK 

Weeks 

Shark 

Shares 

Shares 

Shares 

Shares 

1 

2 

.010 

.012 

.015 

3 

.011 

.017 

.023 

.030 

4 

.010 

.020 

.030 

.040 

.047 

5 

.014 

.030 

.043 

.060 

.072 

6 

.02U 

.040 

.060 

.081 

.101 

7 

.027 

.054 

.081 

.107 

.140 

8 

.034 

.070 

.103 

.140 

.172 

9 

.043 

.086 

.130 

.173 

.216 

10 

.053 

.  106 

.160 

.212 

.265 

11 

.063 

.127 

.190 

.254 

.317 

12 

.070 

.150 

.225 

.300 

.375 

13 

.087 

.170 

.262 

.350 

.437 

U 

.101 

.202 

.303 

.404 

.505 

15 

.115 

.231 

.346 

.462 

•  577 

16 

.130 

.261 

.392 

.523 

.653 

17 

.147 

.294 

.441 

.590 

.735 

18 

.164 

.330 

.493 

.660 

.822 

19 

.182 

.360 

.550 

.731 

.913 

20 

.202 

.404 

.606 

.808 

1.010 

21 

.222 

.444 

.666 

.890 

1.110 

22 

.243 

.486 

.730 

.973 

1.216 

23 

.265 

.530 

.795 

1.061 

1.326 

24 

.290 

.577 

.865 

1.154 

1.442 

26 

.312 

.620 

.932 

1.250 

1.562 

26 

.337 

.670 

1.012 

1.350 

1.687 

[338] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500.— Dues,  50c.  per  week. 


SIX  PER  CENT  TABLES. 


No. 

Onk 

Two 

Three 

Four 

Five 

Wkeks 

Shark 

Shares 

Shares 

Shares 

Shares 

1 

2 

.010 

.015 

.020 

3 

.014 

.020 

.027 

.034 

4 

.012 

.024 

.034 

.045 

.054 

5 

.020 

.032 

.052 

.070 

.087 

6 

.024 

.050 

.073 

.097 

.121 

7 

.033 

.064 

.097 

.130 

.162 

8 

.041 

.082 

.124 

.165 

.207 

9 

.052 

.103 

.155 

.207 

.260 

10 

.063 

.127 

.191 

.255 

.320 

11 

.076 

.153 

.230 

.304 

.381 

12 

.090 

.180 

.270 

.360 

.450 

13 

.105 

.210 

.315 

.420 

.525 

14 

.121 

.243 

.363 

.484 

.606 

15 

.140 

.277 

.415 

.554 

.693 

16 

.157 

.313 

.470 

.627 

.784 

17 

.177 

.352 

.530 

.705 

.882 

IS 

.197 

.394 

.597 

.790 

.987 

19 

.220 

.440 

.657 

.877 

1.096 

20 

.243 

.484 

.727 

.970 

1.212 

21 

.266 

.532 

.800 

1.065 

1.332 

22 

.292 

.583 

.900 

1.167 

1.460 

23 

.320 

.636 

.954 

1.273 

1.591 

24 

.346 

.693 

1.040 

1.384 

1.731 

25 

.375 

.750 

1.125 

1.500 

1.875 

26 

.405 

.810 

1.210 

1.620 

2.025 

[3391 


CHAPTER  XXII. 


Shares,  $250  or  $500. — Dues,  50c.  i>er  week. 


SEVEN  PER  CENT  TABLES. 


No. 

Onb 

Two 

Three 

Four 

Five 

Wbkkb 

Share 

Bhakks 

.Shakes 

Shares 

Sharks 

1 

2 

.010 

.012 

.016 

.021 

3 

.010 

.016 

.024 

.032 

.040 

4 

.013 

.027 

.040 

.053 

.066 

5 

.020 

.040 

.061 

.081 

.101 

6 

.030 

.056 

.085 

.113 

.141 

7 

.037 

.075 

.114 

.151 

.190 

8 

.050 

.096 

.145 

.193 

.241 

9 

.060 

.121 

.181 

.242 

.302 

10 

.074 

.147 

.223 

.296 

.371 

11 

.090 

.177 

.266 

.355 

.444 

12 

.105 

.210 

.315 

.420 

.525 

13 

.122 

.245 

.367 

.480 

.612 

14 

.142 

.282 

.424 

.575 

.707 

15 

.162 

.324 

.485 

.646 

.810 

16 

.183 

.366 

.550 

.732 

.915 

17 

.205 

.411 

.617 

.823 

1.030 

18 

.230 

.460 

.691 

.921 

1.151 

19 

.250 

.511 

.767 

1.024 

1.280 

20 

.282 

.565 

.850 

1.131 

1.414 

21 

.320 

.621 

.933 

1.243 

1.554 

22 

.340 

.681 

1.021 

1.362 

1.702 

23 

.367 

.742 

1.114 

1.486 

1.856 

24 

.403 

.807 

1.211 

1.615 

2.020 

25 

.437 

.875 

1.312 

1.750 

2.187 

26 

.472 

.995 

1.412 

1.890 

2.362 

[340] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


EIGHT  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shakes 

Shares 

Shares 

Shares 

1 

.010 

2 

.010 

.015 

.020 

.024 

3 

.010 

.020 

.027 

.036 

.046 

4 

.015 

.031 

.045 

.060 

.076 

5 

.023 

.047 

.070 

.092 

.116 

6 

.033 

.065 

.097 

.130 

.162 

7 

.043 

.087 

.130 

.172 

.216 

8 

.055 

.111 

.165 

.220 

.276 

9 

.070 

.140 

.207 

.276 

.346 

10 

.084 

.170 

.255 

.340 

.424 

11 

.101 

.203 

.304 

.407 

.510 

12 

.120 

.240 

.360 

.480 

.600 

13 

.140 

.280 

.420 

.560 

.700 

14 

.161 

.323 

.484 

.647 

.810 

15 

.184 

.370 

.555 

.740 

.924 

16 

.210 

.420 

.627 

.836 

1.046 

17 

.230 

.471 

.705 

.940 

1.176 

18 

.263 

.527 

.790 

1.052 

1.316 

19 

.293 

.584 

.877 

1.170 

1.462 

20 

.323 

.647 

.970 

1.292 

1.616 

21 

.355 

.711 

1.065 

1.420 

1.776 

22 

.390 

.780 

1.162 

1.556 

1.946 

23 

.430 

.850 

1.273 

1.697 

2.122 

24 

.461 

.923 

1.3S4 

1.847 

2.310 

25 

.500 

1.000 

1.500 

2.000 

2.500 

26 

.540 

1.080 

1.620 

2.160 

2.700 

[3411 


CHAPTER  XXII. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


NINE  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Shark 

Shares 

Shares 

Shares 

Shares 

1 

.010 

2 

.010 

.016 

.021 

.027 

3 

.010 

.020 

.031 

.042 

.051 

4 

.017 

.035 

.051 

.070 

.085 

5 

.026 

.052 

.090 

.105 

.130 

6 

.037 

.073 

.110 

.145 

.182 

7 

.050 

.097 

.145 

.195 

.243 

8 

.062 

.124 

.186 

.250 

.310 

9 

.080 

.  155 

.233 

.312 

.390 

10 

.096 

.190 

.287 

.381 

.477 

11 

.114 

.230 

.343 

.457 

.571 

12 

.135 

.270 

.405 

.540 

.625 

13 

.157 

.315 

.472 

.630 

.787 

14 

.181 

.363 

.545 

.727 

.910 

15 

.210 

.415 

.623 

.831 

1.040 

16 

.235 

.470 

.706 

.942 

1.176 

17 

.264 

.530 

.793 

1.060 

1.323 

18 

.296 

.592 

.890 

1.185 

1.480 

19 

.330 

.660 

.986 

1.315 

1.644 

20 

.363 

.727 

1.090 

1.455 

1.820 

21 

.400 

.800 

1.196 

1.600 

2.000 

22 

.437 

.875 

1.313 

1.752 

2.190 

23 

.480 

.960 

1.432 

1.910 

2.387 

24 

.520 

1.040 

1.560 

2.077 

2.596 

25 

.562 

1.125 

1.687 

2.250 

2.812 

26 

.607 

1.215 

1.822 

2.430 

3.037 

[342] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


TEN  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Weeks 

Shake 

Shares 

Shakes 

Shares 

Shakes 

1 

.010 

.010 

2 

.012 

.020 

.024 

.030 

3 

.011 

.023 

.034 

.046 

.057 

4 

.020 

.040 

.057 

.076 

.095 

5 

.030 

.060 

.087 

.116 

.145 

6 

.040 

.081 

.121 

.162 

.202 

7 

.052 

.110 

.162 

.216 

.270 

8 

.070 

.140 

.207 

.276 

.345 

9 

.086 

.173 

.260 

.341 

.432 

10 

.101 

.212 

.320 

.424 

.530 

11 

.127 

.254 

.381 

.510 

.635 

12 

.150 

.300 

.450 

.600 

.750 

13 

.175 

.350 

.525 

.700 

.875 

14 

.202 

.404 

.606 

.810 

1.010 

15 

.231 

.462 

.693 

.924 

1.155 

16 

.261 

.523 

.784 

1.046 

1.307 

17 

.294 

.590 

.882 

1.176 

1.470 

18 

.330 

.660 

.987 

1.316 

1.645 

19 

.360 

.731 

1.096 

1.462 

1.827 

20 

.404 

.810 

1.212 

1.616 

2.020 

21 

.444 

.890 

1.332 

1.776 

2.220 

22 

.486 

.973 

1.460 

1.946 

2.432 

23 

.530 

1.061 

1.591 

2.122 

2.652 

24 

.577 

1.154 

1.731 

2.310 

2.880 

26 

.620 

1.250 

1.875 

2.500 

3.125 

26 

.670 

1.350 

2.025 

2.700 

3.375 

[343J 


CilAlTER   XXII. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


ELEVEN  PER  CENT  TABLES. 


No. 

One 

Two 

Three 

Four 

Five 

Wbeks 

Share 

Shares 

Sharks 

Shares 

Shares 

1 

.010 

.011 

2 

.013 

.020 

.027 

.033 

3 

.012 

.025 

.032 

.050 

.063 

4 

.020 

.043 

.062 

.083 

.104 

5 

.032 

.063 

.095 

.127 

.160 

6 

.044 

.090 

.133 

.130 

.222 

7 

.060 

.118 

.180 

.237 

.297 

8 

.076 

.151 

.227 

.303 

.380 

9 

.095 

.190 

.286 

.380 

.475 

10 

.110 

.233 

.302 

.467 

.583 

11 

.140 

.280 

.420 

.560 

.700 

12 

.160 

.330 

.495 

.660 

.825 

13 

.192 

.385 

.577 

.770 

.962 

14 

.222 

.445 

.666 

.890 

1.111 

15 

.254 

.510 

.762 

1.017 

1.270 

16 

.287 

.575 

.862 

1.150 

1.440 

17 

.323 

.686 

.970 

1.293 

1.617 

18 

.362 

.723 

1.085 

1.447 

1.810 

19 

.402 

.804 

1.206 

1.610 

2.010 

20 

.444 

.890 

1.333 

1.777 

2.222 

21 

.437 

.976 

1.465 

1.953 

2.442 

22 

.535 

1.070 

1.605 

2.140 

2.675 

23 

.583 

1.167 

1.755 

2.334 

2.917 

24 

.633 

1.270 

1.954 

2.540 

3.173 

26 

.687 

1.375 

2.062 

2.750 

3.437 

26 

.742 

1.485 

2.227 

2.970 

3.712 

1344] 


DISTRIBUTION  OF  EARNINGS. 


Shares,  $250  or  $500. — Dues,  50c.  per  week. 


TWELVE  PER  CENT  TABLES. 


No. 

ONK 

Two 

Three 

Four 

Five 

Weeks 

Share 

Shares 

Shares 

Shares 

Shares 

1 

.010 

.012 

2 

.014 

.021 

.020 

.036 

3 

.013 

.027 

.042 

.055 

.070 

4 

.022 

.046 

.070 

.091 

.114 

5 

.034 

.070 

.106 

.140 

.174 

6 

.050 

.097 

.145 

.195 

.243 

7 

.064 

.130 

.195 

.260 

.324 

8 

.082 

.165 

.250 

.331 

.414 

9 

.103 

.207 

.311 

.415 

.520 

10 

.127 

.255 

.383 

.510 

.636 

11 

.153 

.304 

.457 

.610 

.762 

12 

.180 

.360 

.540 

.720 

.900 

13 

.210 

.420 

.630 

.840 

1.050 

14 

.243 

.484 

.727 

.970 

1.212 

15 

.277 

.555 

.831 

1.103 

1.386 

16 

.313 

.627. 

.941 

1.255 

1.570 

17 

.353 

.705 

1.060 

1.411 

1.764 

18 

.364 

.790 

1.184 

1.580 

1.974 

19 

.440 

.880 

1.315 

1.755 

2.193 

20 

.484 

.970 

1.455 

1.940 

2.424 

21 

.532 

1.065 

1.600 

2.131 

2.664 

22 

.583 

1.167 

1.752 

2.335 

2.920 

23 

.636 

1.273 

1.960 

2.547 

3.183 

24 

.690 

1.384 

2.077 

2.770 

3.462 

26 

.750 

1.500 

2.250 

3.000 

3.750 

26 

.810 

1.620 

2.430 

3.240 

4.050 

:t-ir. 


CHAPTER  XXII. 

PERMANENT  PLAN— SYSTEM  II. 
EXPLANATION. 

TO    FIND   THE   AMOUNT    UPON    WHICH    DIVIDENDS    FOR    ONE    SHARE    IS    TO 
BE    DECLARED. 

Rule.  Add  together  the  number  of  zveeks  each  $i  has  been 
paid  in.  Divide  this  total  by  the  number  of  weeks  in  the  term.  The 
quotient  gives  the  average  amount  to  be  credited  for  the  entire  term. 

Example.  A  pays  $1  weekly  for  a  term  of  26  weeks.  What  is 
the  average  amount  to  his  credit  at  the  close  of  the  term?  Add 
together  the  number  of  weeks  $1  has  been  paid  in,  each  26,  25,  24, 
etc.,  down  to  1.  The  total  is  351  weeks.  That  is  to  say  the  credits 
to  which  he  is  entitled  on  his  payments  as  he  has  made  them  are 
together  equal  to  a  credit  of  $1  for  351  weeks.  But  $1  for  351  weeks 
is  equal  to  as  many  dollars  for  26  weeks  as  26  weeks  is  contained  in 
351  weeks,  which  is  13^  times,  or  $13.50. 

TO   FIND   THE   R.\TE   PER   CENT  OF   DIVIDEND   TO   BE   DECLARED. 

Rule.  Average  the  amount  to  the  credit  of  each  member  accord- 
ing to  the  above  rule  and  example.  Then  find  the  sum  of  all  the 
average  amounts.  Find  zvhat  per  cent  the  total  profits  are  of  this 
sum  and  this  per  cent  will  give  the  rate  of  dividend  to  be  declared. 

Example.  Suppose  the  association  has  125  members  and  that  the 
total  of  the  averaged  investments  is  $4,050.  Suppose  that  the  profits 
of  the  association  for  the  term  are  $265.  One  per  cent  of  $4,050  is 
$40.50.  $265  will  be  as  many  times  one  per  cent  of  $4,050  as  $40.50 
is  contained  in  it  which  is  O^^i  times.  Since  it  is  not  convenient 
to  calculate  interest  at  6*%i  per  cent  the  rate  of  the  dividend 
would  probably  be  fixed  at  6  per  cent  and  the  small  balance  of 
profits  left  over  after  the  distribution  at  this  rate  would  be  placed  in 
the  reserve  fund. 

TO     FIND    THE    FIRST     DIVIDEND. 

Rule.  Find  the  per  cent  of  the  given  amount  in  the  table  at  the 
given  rate  for  the  dividend. 

Example.  A  has  paid  $1  weekly  on  5  shares  for  15  weeks.  What 
is  the  semi-annual  dividend,  the  rate  being  6  per  cent  per  annum? 
We  find  that  the  average  amount  to  his  credit  is  $23.10,  which  at  6 
per  cent  per  annum  gives  him  a  dividend  of  $0.69. 

[3461 


DISTRIBUTION  OF  EARNINGS. 

TO     FIND    ANY     SUCCEEDING     DmDEND. 

Rule.  Add  to  the  amount  standing  to  the  credit  of  a  shareholder 
at  the  beginning  of  the  term,  his  average  credit  for  the  term.  From 
this  sum  deduct  any  dues  withdrawn  during  the  term.  The  balance 
will  be  the  amount  upon  which  the  dividend  is  to  be  calculated. 

Example.  A  has  $350  to  his  credit  at  the  beginning  of  the  term. 
He  is  entitled  to  an  average  credit  for  his  payments  during  the  term 
on  his  five  shares  of  $67.o0.  This  added  to  the  $350  amounts  to 
$417.50.  Deduct  from  this  amount  $50  dues  withdrawn,  leaving  a 
balance  of  $367.50  the  amount  upon  which  his  dividend  is  to  be 
based  at  6  per  cent  per  annum.    His  dividend  is  $11.02. 

The  first  of  the  following  tables  shows  the  total  num- 
ber of  weeks'  credit  on  $i  for  the  payments  made  during 
a  term.  The  remaining  tables  show  the  average  amount 
each  shareholder  has  to  his  credit  for  any  number  of 
weeks  from  i  to  26  and  for  any  number  of  shares  from 
I  to  10: 


CHAPTER  XXII. 


1348J 


DISTRIBUTION  OF  EARNINGS. 


1  sban  at  50  cents. 

2  shares  at  50c.  or  1  share  at  $1. 

WMk. 

DUES. 

Average 
Antount. 

Week. 

DUES. 

Average 
Amount 

1 

.50 

.019 

1 

1. 00 

.03 

2 

1.00 

.057 

2 

2.00 

.11 

8 

1.50 

.115 

3 

3.00 

.23 

4 

2.00 

.192 

4 

4.00 

.38 

5 

2.50 

.288 

5 

5.00 

.57 

6 

3.00 

.404 

6 

6.00 

,80 

7 

3.50 

.538 

7 

7.00 

1.07 

8 

4.00 

.692 

8 

8.00 

1,38 

9 

4.50 

.865 

9 

9.00 

1,73 

10 

5.00 

1.06 

10 

10.00 

2.12 

11 

5.50 

1.27 

11 

11.00 

2.54 

12 

6.00 

1.50 

12 

12.00 

3.00 

13 

6.50 

1.75 

13 

13.00 

3,50 

14 

7.00 

2.02 

14 

14.00 

4,04 

15 

7.50 

2.31 

15 

15.00 

4.62 

16 

8.00 

2.62 

16 

16.00 

5,23 

17 

8.50 

2.94     ^ 

17 

17.00 

5.88 

18 

9.00 

3.29 

18 

18.00 

6.58 

19 

9.50 

3.65 

19 

19,00 

7.31 

20 

10.00 

4.04 

20 

20,00 

8,08 

21 

10.50 

4.44 

21 

21.00 

8.88 

22 

11.00 

4.86 

22 

22.00 

9.73 

23 

11.50 

5.31         : 

23 

23.00 

10.62 

24 

12.00 

5.77 

24 

24.00 

11,54 

25 

12.50 

6.25 

25 

25.00 

12.50 

26 

13.00 

6.76 

26 

i         26.00 

13.60 

|:;;fi| 


ciiAr'i'i-:R  XX! [. 


3  sbares  at  50  cents. 

4  shares  at  50c.  or  2  ihares  at  $1. 

We«V. 

DUES. 

Average 
Amount. 

Week. 

DUES. 

Average 
Amount. 

1 

1.50 

.05 

1 

2.00 

.07 

2 

3.00 

.17 

2 

4.00 

.22 

3 

4.50 

.34 

3 

6.00 

.46 

4 

6.00 

.57 

4 

8.00 

.76 

5 

7.50 

.86 

5 

10.00 

1.15 

6 

9.00 

1.20 

6 

12.00 

1.61 

7 

10.50 

1.61 

7 

14.00 

2.15 

8 

12.00 

2.07 

8 

16.00 

2.76 

9 

13.50 

2.59 

9 

18.00 

3.46 

10 

15.00 

3.18 

10 

20.00 

4.24 

11 

16.50 

3.81 

11 

22.00 

5.08 

12 

18.00 

4.50 

12 

24.00 

6.00 

13 

19.50 

5.25 

13 

26.00 

7.00 

14 

21.00 

6.06 

14 

28.00 

8.08 

15 

22.50 

6.93 

15 

30.00 

9.24 

16 

24.00 

7.86 

16 

32.00 

10.48 

17 

25.50 

8.82 

17 

34.00 

11.76 

18 

27.00 

9.87 

18 

36.00 

13.16 

19 

28.50 

10.95 

19 

38.00 

14.60 

20 

30.00 

12.12 

20 

40.00 

16.16 

21 

31.50 

13.32 

21 

42.00 

17.76 

22 

33.00 

14.58 

22 

44.00 

19.44 

23 

34.50 

15.93 

23 

46.00 

21.24 

24 

36.00 

17.31 

24 

48.00 

23.08 

25 

37.50 

18.75 

25 

50.00 

25.00 

26 

39.00 

20.25 

26 

52.00 

27.00 

[3501 


DISTRIBUTION  OF  EARNINGS. 


5  ihares  at  SO  cents. 

6  shares  at  90c.  or  3  shares  at  $1. 

Week. 

DUES. 

Average 
AnMHtnt. 

Week. 

DUES. 

Average 
Amount. 

1 

2.50 

.09 

1 

3.00 

.11 

2 

5.00 

.28 

2 

6.00 

.34 

3 

7.50 

.57 

3 

9.00 

.69 

4 

10.00 

.96 

4 

12.00 

1.15 

5 

12.50 

1.44 

5 

15.00 

1.72 

6 

15.00 

2.02 

6 

18.00 

2.42 

7 

17.50 

2.69 

7 

21.00 

3.22 

8 

20.00 

3.46 

8 

24.00 

4.15 

9 

22.50 

4.32 

9 

27.00 

5.19 

10 

25.00 

5.30 

10 

30.00 

6.36 

11 

27.50 

6.35 

11 

33.00 

7.62 

12 

30.00 

7.50 

12 

36.00 

9.00 

13 

32.50 

8.75 

13 

39.00 

10.50 

14 

35.00 

10.10 

14 

42.00 

12.12 

15 

37.50 

11.55 

15 

45.00 

13.86 

16 

40.00 

13.10 

16 

48.00 

15.72 

17 

42.50 

14.70 

17 

51.00 

17.64 

18 

45.00 

16.45 

18 

54.00 

19.74 

19 

47.50 

18.25 

19 

57.00 

21.90 

20 

50.00 

20.20 

20 

60.00 

24.24 

21 

52.50 

22.20 

21 

63.00 

26.64 

22 

55.00 

24.30 

22 

66.00 

29.16 

23 

57..50 

26.55 

23 

69.00 

31.86 

24 

60.00 

28.85 

1  24 

72.00 

34.62 

25 

62.50 

31.25 

25 
26 

75.00 

37.50 

26 

65.00 

33.75 

1         78.00 

40.50 

i;)M] 


CHAPTKR  XXI 1. 


7  shtrn«tS0c6Bt8. 

JS  shares  at  50c.  or  4  shares  at  $1. 

WMk. 

DUES. 

Average 
Amount. 

Week. 

DUES. 

A«erag« 
Amount 

1 

3.50 

.13 

1 

4.00 

.15 

2 

7.00 

.39 

2 

8.00 

.45 

3 

10.50 

.80 

3 

12.00 

.92 

4 

14.00 

1.34 

4 

16.00 

1.53 

5 

17.50 

2.01 

5 

20.00 

2.30 

0 

21.00 

2.82 

6 

24.00 

3.23 

7 

24.50 

3.76 

7 

28.00 

4.30 

8 

28.00 

4.84 

8 

32.00 

5.53 

9 

31.50 

6.05 

9 

36.00 

6.92 

10 

35.00 

7.42 

10 

40.00 

8.48 

11 

38.50 

8.89 

11 

44.00 

10.16 

12 

42.00 

10.50 

12 

48.00 

12.00 

13 

45.50 

12.25 

13 

52.00 

14.00 

14 

49.00 

14.14 

14 

56.00 

16.16 

15 

52.50 

16.17 

15 

60.00 

18.48 

16 

56.00 

18.34 

16 

64.00 

20.96 

17 

59.50 

20.58 

17 

68.00 

23.52 

18 

03.00 

23.03 

18 

72.00 

26.32 

19 

66.50 

25.55 

19 

76.00 

29.20 

20 

70.00 

28.28 

20 

80.00 

32.32 

21 

73.50 

31.08 

21 

84.00 

35.52 

22 

77.00 

34.02 

22 

88.00 

38.88 

23 

80.50 

37.17 

23 

92.00 

42.48 

24 

84.00 

40.39     i 

24 

96.00 

46.16 

25 

87.50 

43.75      1 

25 

100.00 

50.00 

26 

91.00 

47.25      1 

26 

104.00 

54.00 

13521 


DISTRIBUTION  OF  EARNINGS. 


9  shares  at  50  cents. 

10  shares  at  50c.  or  5  shares  at  $1. 

WMk. 

DUES. 

Average 
Amount. 

Week. 

DUES. 

Average 
Amount. 

1 

4.50 

.17 

1 

5.00 

.19 

2 

9.00 

.51 

2 

10.00 

.57 

3 

13.50 

1.03 

3 

15.00 

1.15 

4 

18.00 

1.72 

4 

20.00 

1.92 

5 

22.50 

2.59 

5 

25.00 

2.88 

6 

27.00 

3.63 

6 

30.00 

4.04 

7 

31.50 

4.84 

7 

35.00 

5.38 

8 

36.00 

6.22 

8 

40.00 

6.92 

9 

40.50 

7.78 

9 

45.00 

8.65 

10 

45.00 

9.54 

10 

50.00 

10.60 

11 

49.50 

11.43 

11 

55.00 

12.70 

12 

54.00 

13.50 

12 

60.00 

15.00 

13 

58.50 

15.75 

13 

65.00 

17.50 

14 

63.00 

18.18 

14 

70.00 

20.20 

15 

67.50 

20.79 

15 

75.00 

23.10 

16 

72.00 

23.58 

16 

80.00 

26.20 

17 

76.50 

26.46 

17 

85.00 

29.40 

18 

81.00 

29.61 

18 

90.00 

32.90 

19 

85.50 

32.85 

19 

95.00 

36.50 

20 

90.00 

36.36 

20 

100.00 

40.40 

21 

94.50 

39.96 

21 

105.00 

44.40 

22 

99.00 

43.74 

22 

110.00 

48.60 

23 

103.50 

47.79 

23 

115.00 

53.10 

24 

108.00 

51.93 

24 

120.00 

57.70 

25 

112.50 

56.25 

25 

125.00 

62.50 

26 

117.00 

60.75 

26 

130.00 

67.50 

[3531 


ciiArn-R  XXII. 


4  per  cent  table. 


IMIart. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

88 

.76 

75 

1.50 

2 

.04 

39 

•78 

76 

1.52 

3 

.06 

40 

.80 

77 

1.64 

4 

.08 

41 

.82 

78 

1.56 

5 

.10 

42 

.84 

79 

1.58 

6 

.12 

48 

.86 

80 

1.60 

7 

.14 

44 

.88 

81 

1.62 

8 

.16 

45 

.90 

82 

1.64 

9 

.18 

46 

.92 

83 

1.66 

10 

.20 

47 

.94 

84 

1.68 

11 

.22 

48 

.96 

85 

1.70 

12 

.24 

49 

.98 

86 

1.72 

13 

.26 

50 

1.00 

87 

1.74 

14 

.28 

51 

1.02 

88 

1.76 

16 

.30 

52 

1.04 

89 

1.78 

16 

.32 

53 

1.06 

90 

1.80 

17 

.84 

54 

1.08 

91 

1.82 

18 

.36 

55 

1.10 

92 

1.84 

19 

.88 

56 

1.12 

98 

1.86 

20 

.40 

57 

1.14 

94 

1.88 

21 

.42 

58 

1.16 

96 

1.90 

22 

.44 

59 

1.18 

96 

1.92 

23 

.46 

60 

1.20 

97 

1.94 

24 

.48 

61 

1.22 

98 

1.96 

25 

.50 

62 

1.24 

99 

1.98 

26 

.52 

63 

1.26 

27 

.54 

64 

1.28 

100 

2.00 

28 

.56 

65 

1.80 

200 

4.00 

29 

.58 

66 

1.82 

300 

6.00 

80 

.60 

67 

1.34 

400 

8.00 

31 

.62 

68 

1.86 

500 

10.00 

32 

.64 

69 

1.88 

600 

12.00 

38 

.66 

70 

1.40 

700 

14.00 

34 

.68 

71 

1.42 

800 

16.00 

36 

.70 

72 

1.44 

900 

18.00 

36 

.72 

73 

1.46 

1000 

20.00 

87 

.74 

74 

1.48 

Calculatioa   for   six   months. 


[354] 


DISTRIBUTION  OF  EARNINGS. 


4^  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest 

1 

.02 

88 

.81 

75 

1.59 

2 

.04 

89 

.83 

76 

1.61 

8 

.06 

40 

.85 

77 

1.64 

4 

.08 

41 

.87 

78 

1.66 

5 

.11 

42 

.89 

79 

1.68 

6 

.13 

43 

.91 

80 

1.70 

7 

.15 

44 

.93 

81 

1.72 

8 

.17 

45 

.96 

82 

1.74 

9 

.19 

46 

.98 

83 

1.76 

10 

.21 

47 

1.00 

84 

1.78 

11 

.23 

48 

1.02 

85 

1.81 

12 

.25 

49 

1.04 

86 

1.83 

18 

.28 

60 

1.06 

87 

1.85 

14 

.30 

51 

1.08 

88 

1.87 

16 

.32 

52 

1.10 

89 

1.89 

16 

.34 

53 

1.13 

90 

1.91 

17 

.36 

54 

1.15 

91 

1.98 

18 

.88 

55 

1.17 

92 

1.95 

10 

.40 

56 

1.19 

93 

1.98 

20 

.42 

57 

1.21 

94 

2.00 

21 

.45 

58 

1.23 

95 

2.02 

22 

.47 

59 

1.25 

96 

2.04 

28 

.49 

60 

1.27 

97 

2.06 

24 

.51 

61 

1.80 

98 

2.08 

26 

.53 

62 

1.82 

99 

2.10 

26 

.55 

63 

1.34 

27 

.57 

64 

1.80 

100 

2.12 

28 

.59 

65 

1.38 

200 

4.26 

29 

.62 

66 

1.40 

300 

6.87 

80 

.64 

67 

1.42 

400 

8.50 

81 

.66 

68 

1.44 

500 

10.62 

82 

.68 

69 

1.47 

'       600 

12.75 

88 

.70 

70 

1.49 

!       700 

14.87 

84 

.72 

71 

1.51 

800 

17.00 

86 

.74 

72 

1.58 

900 

19.12 

86 

.76 

78 

1.55 

1000 

21.25 

87 

.79 

74 

1.57 

Calculation    for    six    inoiiths. 


[355] 


CHAPTER  XXII. 


4j4  per  cent  table. 


Dollar*. 

Interatt. 

Dollars. 

Interest. 

Dollar*. 

Intemt. 

1 

.02 

88 

.85 

75 

1.69 

2 

.04 

89 

.88 

76 

1.71 

8 

.07 

40 

.90 

77 

1.78 

4 

.09 

41 

.92 

78 

1.75 

5 

.11 

42 

.94 

79 

1.78 

6 

.18 

48 

.97 

80 

1.80 

7 

.16 

44 

.99 

81 

1.82 

8 

.18 

45 

1.01 

82 

1.84 

9 

.20 

46 

1.08 

83 

1.87 

10 

.22 

47 

1.06 

84 

1.89 

11 

.25 

48 

1.08 

85 

1.91 

12 

.27 

49 

1.10 

86 

1.93 

18 

.29 

50 

1.12 

87 

1.96 

14 

.31 

51 

1.15 

88 

1.98 

15 

.34 

52 

1.17 

89 

2.00 

16 

.36 

53 

1.19 

90 

2.02 

17 

.38 

54 

1.21 

91 

2.05 

18 

.40 

55 

1.24 

92 

2.07 

19 

.48 

56 

1.26 

98 

2.09 

20 

.46 

57 

1.28 

94 

2.11 

21 

.47 

58 

1.80 

95 

2.14 

22 

.49 

59 

1.83 

96 

2.16 

28 

.52 

60 

1.85 

97 

2.18 

24 

.54 

61 

1.87 

98 

2.20 

25 

.56 

62 

1.89 

99 

2.23 

26 

.58 

68 

1.42 

27 

.61 

64 

1.44 

100 

2.25 

28 

.63 

65 

1.46 

200 

4.50 

29 

.65 

66 

1.48 

300 

6.75 

80 

.67 

67 

1.51 

400 

9.00 

81 

.70 

68 

1.53 

500 

11.25 

82 

.72 

69 

1.55 

600 

18.50 

33 

.74 

70 

1.57 

700 

15.75 

34 

.76 

71 

1.60 

800 

18.00 

35 

.79 

72 

1.62 

900 

20.25 

86 

.81 

78 

1.64 

1000 

22.50 

87 

.83 

74 

1.66 

Calculation    for   six   months. 
[356] 


DISTRIBUTION  OF  EARNINGS. 


4^  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.02 

88 

.90 

75 

1.78 

2 

.05 

39 

.93 

76 

1.80 

3 

.07 

40 

.95 

77 

1.83 

4 

.09 

41 

.97 

78 

1.85 

5 

.12 

42 

1.00 

79 

1.88 

6 

,14 

48 

1.02 

80 

1.90 

7 

.17 

44 

1.04 

81 

1.92 

8 

.19 

45 

1.07 

82 

1.95 

9 

.21 

46 

1.09 

83 

1.97 

10 

.24 

47 

1.12 

84 

1.99 

11 

.26 

48 

1.14 

85 

2.02 

12 

.28 

49 

1.16 

86 

2.04 

18 

.81 

50 

1.19 

87 

2.07 

14 

.38 

51 

1.21 

88 

2.09 

16 

.86 

52 

1.23 

89 

2.11 

16 

.88 

58 

1.26 

90 

2.14 

17 

.40 

54 

1.28 

91 

2.16 

18 

.43 

55 

1.81 

92 

2.18 

19 

.45 

56 

1.33 

98 

2.21 

20 

.47 

57 

1.85 

94 

2.23 

21 

.50 

58 

1.88 

95 

2.26 

22 

.52 

59 

1.40  1 

96 

2.28 

23 

.55 

60 

1.42  i 

97 

2.30 

24 

.57 

61 

1.45  1 

98 

2.38 

25 

.59 

62 

1.47 

99 

2.85 

26 

.62 

63 

1.50 

27 

.64 

64 

1.52 

100 

2.87 

28 

.66 

65 

1.54 

200 

4.76 

29 

.69 

66 

1.57 

800 

7.12 

80 

.71 

67 

1.59 

400 

9.50 

81 

.74 

68 

1.61 

500 

11.87 

82 

.76 

69 

1.64 

600 

14.25 

88 

.78 

70 

1.66 

700 

16.62 

84 

.81 

71 

1.69 

800 

19.00 

85 

.88 

72 

1.71 

900 

21.87 

86 

.85 

78 

1.78 

1000 

28.75 

87 

.88 

74 

1.76 

Calculation    for    six    months. 


(:j.^7 


CHAPTER  XXII. 


6  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest 

1 

.02 

38 

.95 

75 

1.87 

2 

.05 

39 

.97 

76 

1.90 

3 

.07 

40 

1.00 

77 

1.92 

4 

.10 

41 

1.02 

78 

1.95 

5 

.12 

42 

1.05 

79 

1.97 

6 

.15 

43 

1.07 

80 

2.00 

7 

.17 

44 

1.10 

81 

2.02 

8 

.20 

45 

1.12 

82 

2.05 

9 

.22 

46 

1.15 

83 

2.07 

10 

.25 

47 

1.17 

84 

2.10 

11 

.27 

48 

1.20 

85 

2.12 

U 

.30 

49 

1.22 

86 

2.15 

13 

.32 

50 

1.25 

87 

2.17 

14 

.35 

51 

1.27 

88 

2.20 

15 

.37 

52 

1.30 

89 

2.22 

16 

.40 

53 

1.32 

90 

2.25 

17 

.42 

54 

1.35 

91 

2.27 

18 

.45 

55 

1.37 

92 

2.30 

19 

.47 

56 

1.40 

93 

2.32 

20 

.50 

57 

1.42 

94 

2.35 

21 

.52 

58 

1.45 

95 

2.37 

22 

.55 

59 

1.47 

96 

2.40 

23 

.57 

60 

1.50 

97 

2.42 

24 

.60 

61 

1.52 

98 

2.45 

25 

.62 

62 

1.55 

99 

2.47 

26 

.65 

63 

1.57 

27 

.67 

64 

1.60 

100 

2.50 

28 

.70 

65 

1.62 

200 

5.00 

29 

.72 

66 

1.65 

300 

7.50 

30 

.75 

67 

1.67 

400 

10.00 

31 

.77 

6S 

1.70 

500 

12.50 

32 

.80 

69 

1.72 

600 

15.00 

33 

.82 

70 

1.75 

700 

17.50 

34 

.85 

71 

1.77 

800 

20.00 

35 

.87 

72 

1.80 

900 

22.50 

36 

.90 

73 

1.82 

1000 

25.00 

37 

.92 

74 

1.85 

Calculation   for  six  months. 
[358] 


DISTRIBUTION  OF  EARNINGS. 


6i  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.00 

75 

1.97 

2 

.05 

39 

1.02 

76 

1.99 

3 

.08 

40 

1.05 

77 

2.02 

4 

.10 

41 

1.08 

78 

2.05 

5 

.13 

42 

1.10 

79 

2.07 

6 

.16 

43 

1.13 

80 

2.10 

7 

.18 

44 

1.15 

81 

2.13 

8 

.21 

45 

1.18 

82 

2.15 

9 

.24 

46 

1.21 

83 

2.18 

10 

.26 

47 

1.23 

84 

2.20 

11 

.29 

48 

1.26 

85 

2.23 

12 

.31 

49 

1.29 

86 

2.26 

13 

.34 

50 

1.31 

87 

2.28 

14 

.37 

51 

1.34 

88 

2.31 

15 

.39 

52 

1.36 

89 

2.34 

16 

.42 

53 

1.39 

90 

2.36 

17 

.45 

54 

1.42 

91 

2.39 

18 

.47 

55 

1.44 

92 

2.41 

19 

.50 

56 

1.47 

93 

2.44 

20 

.52 

57 

1.50 

94 

2.47 

21 

.55 

58 

1.52 

95 

2.49 

22 

.58 

59 

1.55 

96 

2.52 

23 

.60 

60 

1.57 

97 

2.55 

24 

.63 

61 

1.60 

98 

2.57 

25 

.(J6 

62 

1.63 

99 

2.60 

26 

,.<)8 

63 

1.65 

27 

.71 

64 

1.68 

100 

2.62 

28 

.73 

65 

1.71 

200 

5.25 

29 

.76 

66 

1.73 

300 

7.87 

30 

.79 

67 

1.76 

400 

10.50 

31 

.81 

68 

1.78 

500 

13.12 

32 

.84 

69 

1.81 

600 

15.75 

33 

.87 

70 

1.84 

700 

18.37 

34 

.89 

71 

1.86 

800 

21.00 

35 

.92 

72 

1.89 

900 

23.62 

36 

.94 

73 

1.92 

1000 

26.25 

37 

.97 

74 

1.94 

Calculation    for   six   months. 


1859] 


CHAPTER  XXII. 


5^  per  cent  table. 


Dollar*. 

Inttrut 

Dollars. 

Intortst. 

Oollara. 

Intareit. 

1 

.03 

38 

1.04 

75 

2.06 

2 

.05 

39 

1.07 

76 

2.09 

3 

.08 

40 

1.10 

77 

2.12 

4 

.11 

41 

1.13 

78 

2.14 

5 

.14 

42 

1.15 

79 

2.17 

6 

.16 

43 

1.18 

80 

2.20 

7 

.19 

44 

1.21 

81 

2.23 

8 

.22 

45 

1.24 

82 

2.25 

9 

.25 

46 

1.26 

83 

2.28 

10 

.27 

47 

1.29 

84 

2.31 

11 

.30 

48 

1.32 

85 

2.34 

12 

.33 

49 

1.35 

86 

2.36 

13 

.36 

50 

1.37 

87 

2.39 

14 

.38 

51 

1.40 

88 

2.42 

15 

.41 

52 

1.43 

89 

2.45 

16 

.44 

53 

1.46 

90 

2.47 

17 

.47 

54 

1.48 

91 

2.50 

18 

.49 

55 

1.51 

92 

2.53 

19 

.52 

56 

1.54 

93 

2.56 

20 

.55 

57 

1.57 

94 

2.58 

21 

.58 

58 

1.59 

95 

2.61 

22 

.60 

59 

1.62 

96 

2.64 

23 

.63 

60 

1.65 

97 

2.67 

24 

.66 

61 

1.68 

98 

2.69 

25 

.69 

62 

1.70 

99 

2.72 

26 

.71 

63 

1.73 

27 

.74 

64 

1.76 

100 

2.75 

28 

.77 

65 

1.79 

200 

5.50 

29 

.80 

66 

1.81 

300 

8.25 

30 

.82 

67 

1.84 

400 

11.00 

31 

.85 

68 

1.87 

500 

13.75 

32 

.88 

69 

1.90 

600 

•16.50 

33 

.91 

70 

1.92 

700 

19.25 

34 

.93 

71 

1.95 

800 

22.00 

35 

.96 

72 

1.98 

900 

24.75 

36 

.99 

73 

2.01 

1000 

27.50 

37 

1.02 

74 

2.03 

Calculation    for   six   months. 
[360] 


DISTRIBUTION  OF  EARNINGS. 


6f  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.09 

75 

2.16 

2 

.06 

39 

1.12 

!         76 

2.18 

3 

.09 

40 

1.15 

i         77 

2.21 

4 

.11 

41 

1.18 

!         78 

2.24 

5 

.14 

42 

1.21 

i         79 

2.27 

6 

.17 

43 

1.24 

]         80 

2.30 

7 

.20 

44 

1.26 

81 

2.33 

8 

.23 

45 

1.29 

1         82 

2.36 

9 

.26 

46 

1.32 

■         83 

2.39 

10 

.29 

47 

1.35 

i         84 

2.41 

11 

.32 

48 

1.58 

1         85 

2.44 

12 

.34 

49 

1.41 

86 

2.47 

13 

.37 

50 

1.44 

87 

2.50 

14 

.40 

51 

1.47 

88 

2.53 

15 

.43 

52 

1.49 

89 

2.56 

16 

.46 

53 

1.52 

90 

2.59 

17 

.49 

54 

1.55 

91 

2.62 

18 

.52 

55 

1.58 

92 

2.64 

19 

.55 

56 

1.61 

93 

2.67 

20 

.57 

57 

1.64 

94 

2.70 

21 

.60 

58 

1.67 

95 

2.73 

22 

.63 

59 

1.70 

96 

2.76 

23 

.66 

60 

1.72 

97 

2.79 

24 

.69 

61 

1.75 

98 

2.82 

25 

.72 

62 

1.78 

99 

2.85 

26 

.75 

63 

1.81 

27 

.78 

64 

1.84 

100 

2.87 

28 

.80 

65 

1.87 

200 

5.75 

29 

.83 

66 

1.90 

300 

8.62 

30 

.86 

!          67 

1.93 

400 

11.50 

31 

.89 

i          68 

1.95 

500 

14.37 

32 

.92 

69 

1.98 

1       600 

17.25 

33 

.95 

70 

2.01 

1       700 

20.12 

34 

.98 

71 

2.04 

1       800 

23.00 

35 

l.OI 

72 

2.07 

900 

25.87 

36 

1.03 

73 

2.10 

1000 

28.75 

37 

1.06 

74 

2.13 

1 

Calnilatioti    for    siv    months. 


[361 : 


CIIAPTKK  XX 11. 


6  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest. 

Dollars. 

Interest. 

1 

.03 

38 

1.14 

75 

2.25 

2 

.06 

39 

1.17 

76 

2.28 

3 

.09 

40 

1.20 

77 

2.31 

4 

.12 

41 

1.23 

78 

2.34 

5 

.15 

42 

1.26 

79 

2.37 

6 

.18 

43 

1.29 

80 

2.40 

7 

.21 

44 

1.32 

81 

2.43 

8 

.24 

45 

1.35 

82 

2.46 

9 

.27 

46 

1.38 

83 

2.49 

10 

.30 

47 

1.41 

84 

2.52 

11 

.33 

48 

1.44 

85 

2.55 

12 

.36 

49 

1.47 

86 

2.58 

13 

.39 

50 

1.50 

87 

2.61 

14 

.42 

51 

1.53 

88 

2.64 

15 

.45 

52 

1.56 

89 

2.67 

16 

.48 

53 

1.59 

90 

2.70 

17 

.51 

54 

1.62 

91 

2.73 

18 

.54 

55 

1.65 

I          92 

2.76 

19 

.57 

56 

1.68 

i         93 

2.79 

20 

.60 

57 

1.71 

94 

2.82 

21 

.63 

58 

1.74 

95 

2.85 

22 

.66 

59 

1.77 

96 

2.88 

23 

.69 

60 

1.80 

97 

2.91 

24 

.72 

61 

1.83 

98 

2.94 

25 

.75 

62 

1.86 

99 

2.97 

26 

.78 

63 

1.89 

27 

.81 

64 

1.92 

100 

.-^.00 

28 

.84 

65 

1.95 

200 

6.00 

29 

.87 

66 

1.98 

300 

9.00 

30 

.90 

67 

2.01 

400 

12.00 

31 

.93 

68 

2.04 

500 

15.00 

32 

.96 

69 

2.07 

600 

18.00 

33 

.99 

70 

2.10 

700 

21.00 

34 

i.a2 

71 

2.13 

800 

24.00 

35 

1.05 

72 

2.16 

900 

27.00 

36 

1.08 

73 

2.19 

1000 

30.00 

37 

1.11 

74 

2.22 

Calculation   for   six  months. 


13621 


DISTRIBUTION  OF  EARNINGS. 


6i  per  cent  table. 


Dollars. 

Interest 

Dollars. 

Interest 

Dollars. 

Interest 

1 

.03 

38 

1.19 

75 

2.34 

2 

.06 

39 

1.22 

76 

2.37 

3 

.09 

40 

1.25 

77 

2.41 

4 

.12 

41 

1.28 

78 

2.44 

5 

.16 

42 

1.31 

79 

2.47 

6 

.19 

43 

1.34 

80 

2.50 

7 

.22 

44 

1.37 

81 

2.53 

8 

.25 

45 

1.41 

82 

2.56 

9 

.28 

46 

1.44 

83 

2.59 

10 

.31 

47 

1.47 

84 

2.62 

11 

.34 

48 

1.50 

85 

2.66 

12 

.37 

49 

1.53 

86 

2.69 

13 

.41 

50 

1.56 

87 

2.72 

14 

.44 

51 

1.59 

88 

2.75 

15 

.47 

52 

1.62 

89 

2.78 

16 

.50 

53 

1.66 

90 

2.81 

17 

.53 

54 

1.69 

91 

2.84 

18 

.56 

55 

1.72 

92 

2.87 

19 

.59 

56 

1.75 

93 

2.91 

20 

.62 

57 

1.78 

94 

2.94 

21 

.66 

58 

1.81 

95 

2.97 

22 

.69 

59 

1.84 

96 

3.00 

23 

.72 

60 

1.87 

97 

2.03 

24 

.75 

61 

1.91 

98 

3.06 

25 

.78 

62 

1.94 

99 

3.09 

26 

.81 

63 

1.97 

27 

.84 

64 

2.00 

100 

3.12 

28 

.87 

65 

2.03 

200 

6.25 

29 

.91 

66 

2.06 

300 

9.37 

30 

.94 

67 

2.09 

400 

12.50 

31 

.97 

68 

2.12 

500 

15.62 

32 

1.00 

69 

2.16 

600 

18.75 

33 

1.03 

70 

2.19 

700 

21.87 

34 

1.06 

71 

2.22 

800 

25.00 

35 

1.09 

72 

2.25 

900 

28.12 

36 

1.12 

73 

2.28 

1000 

31.25 

37   1 

1.16  1 

74 

2.31 

Calculation    for   six   months. 
(363] 


CHAPTER  XXII. 


6^2  per  cent  table. 


Dollars. 


Interest. 


Dollars. 


Interest. 


Dollars. 


Calculation    for   six   months. 
[364] 


interest. 


1 

.03 

38 

1.23 

75 

2.44 

2 

.06 

39 

1.27 

76 

2.47 

3 

.10 

40 

1.30 

77 

2.50 

4 

.13 

41 

1.33 

78 

2.53 

5 

.16 

42 

1.36 

79 

2.57 

6 

.19 

43 

1.40 

80 

2.60 

7 

.23 

44 

1.43 

81 

2.63 

8 

.26 

45 

1.46 

82 

2.66 

9 

.29 

46 

1.49 

83 

2.70 

10 

.32 

47 

1.53 

84 

2.73 

11 

.36 

48 

1.56 

85 

2.76 

12 

.39 

49 

1.59 

86 

2.79 

13 

.42 

50 

1.62 

87 

2.83 

14 

.45 

51 

1.66 

88 

2.86 

15 

.49 

52 

1.69 

89 

2.89 

16 

.52 

53 

1.72 

90 

2.92 

17 

.55 

54 

1.75 

91 

2.96 

18 

.58 

55 

1.79 

92 

2.99 

19 

.62 

56 

1.82 

93 

3.02 

20 

.65 

57 

1.85 

94 

3.05 

21 

.68 

58 

1.88 

95 

3.09 

22 

.71 

59 

1.92 

1    96 

3.12 

23 

.75 

60 

1.95 

1    97 

3.15 

24 

.78 

61 

1.98 

98 

3.18 

25 

.81 

62 

2.01 

99 

3.22 

26 

.84 

63 

2.05 

1 

27 

.88 

64 

2.08 

100 

3.25 

28 

.91 

65 

2.11 

i   200 

6.50 

29 

.94 

66 

2.14 

1   300 

9.75 

30 

.97 

67 

2.18 

i   400 

13.00 

31 

1.01 

68 

2.21 

i   500 

16.25 

32 

1.04 

69 

2.24 

600 

19.50 

33 

1.07 

70 

2.27 

!   700 

22.75 

34 

1.10 

71 

2.31 

i   800 

26.00 

35 

1.14 

72 

2.34 

i   900 

29.25 

36 

1.17 

73 

2.37 

1  1000 

32.50 

37 

1.20 

74 

2.40 

1 

DISTRIBUTION  OF  EARNINGS. 


6f  per  cent  table. 


Dollars: 

Interest. 

Dollars. 

Interest 

Dollars. 

Interest 

1 

.03 

38 

1.28 

75 

2.53 

2 

.07 

39 

1.32 

76 

2.56 

3 

.10 

40 

1.35 

77 

2.60 

4 

.13 

41 

1.38 

i         78 

2.63 

5 

.17 

42 

1.42 

!         79 

2.67 

6 

.20 

43 

1.45 

80 

2.70 

7 

.24 

1          44 

1.48 

81 

2.73 

8 

.27  1 

45 

1.52 

82 

2.77 

9 

.30  ! 

46 

1.55 

83 

2.80 

10 

.34  ' 

47 

1.59 

84 

2.83 

11 

.37  ! 

48 

1.62 

85 

2.87 

12 

.40 

49 

1.65 

86 

2.90 

13 

.44 

50 

1.69 

87 

2.94 

14 

.47 

51 

1.72 

88 

2.97 

15 

.51 

52 

1.75 

89 

3.00 

16 

.54 

53 

1.79 

90 

3.04 

17 

.57 

54 

1.82 

91 

3.07 

18 

.61 

55 

1.86 

92 

3.10 

19 

.64 

56 

1.89 

93 

3.14 

20 

.67 

57 

1.92 

94 

3.17 

21 

.71 

68 

1.96 

95 

3.21 

22 

.74 

59 

1.99 

96 

3.24 

23 

.78  i 

60 

2.02 

97 

3.27 

24 

.81 

61 

2.06 

98 

3.31 

25 

.84 

62 

2.09 

99 

3.34 

26 

.88 

63 

2.13 

27 

.91   1 

64 

2.16 

100 

3.37 

28 

.94  1 

65 

2.19  i 

200 

6.75 

29 

.98 

66 

2.23  > 

300 

10.12 

80 

1.01   I 

67 

2.26 

400 

13.50 

31 

1.05  i 

68 

2.29 

500 

16.87 

32 

1.08  1 

69 

2.33 

600 

20.25 

33 

1.11   j 

70 

2.36 

700 

23.62 

34 

1.15 

71 

2.40  ! 

800 

27.00 

36 

1.18 

72 

2.43 

900 

30.37 

36 

1.21 

73 

2.46 

1000 

33.75 

37 

1.25 

74 

2.50 

Calcwlation    for   six   months. 


CUAPrER  XXII. 


7  per  cent  table. 


Dollars. 

Interest. 

Dollars. 

Interest 

Doll  vs. 

Interest. 

1 

.03 

38 

1.33 

75 

2.62 

2 

.07 

!          39 

1.36 

76 

2.66 

3 

.10 

]         40 

1.40 

77 

2.69 

4 

.14 

i         41 

1.43 

78 

2.73 

5 

.17 

42 

1.47 

79 

2.76 

6 

.21 

43 

1.50 

80 

2.80 

7 

.24 

1         44 

1.54 

81 

2.83 

8 

.28 

45 

1.57 

82 

2.87 

9 

.31 

46 

1.61 

83 

2.90 

10 

.35 

47 

1.64 

84 

2.94 

11 

.38 

48 

1.68 

85 

2.97 

12 

.42 

49 

1.71 

86 

3.01 

13 

.45 

50 

1.75 

87 

3.04 

14 

.49 

51 

1.78 

88 

3.08 

15 

.52 

52 

1.82 

89 

3.11 

16 

.56 

53 

1.85 

90 

3.15 

17 

.59 

54 

1.89 

91 

3.18 

18 

.63 

55 

1.92 

92 

3.22 

19 

.66 

56 

1.96 

93 

3.25 

20 

.70 

57 

1.99 

94 

3.29 

21 

.73 

58 

2.03 

95 

3.32 

22 

.77 

59 

2.06 

96 

3.36 

23 

.80 

60 

2.10 

.  97 

3.39 

24 

.84 

61 

2.13 

98 

3.43 

25 

.87 

62 

2.17 

99 

3.46 

26 

.91 

63 

2.20 

27 

.94 

64 

2.24 

100 

3.50 

28 

.98 

65 

2.27 

200 

7.00 

29 

1.01 

66 

2.31 

300 

10.50 

30 

1.05 

67 

2.34 

400 

14.00 

31 

1.08 

68 

2.38 

500 

17.50 

32 

1.12 

G9 

2.41 

600 

21.00 

33 

1.15 

70 

2.45 

700 

24.50 

34 

1.19 

71 

2.48 

800 

28.00 

35 

1.22 

72 

2.52 

900 

31.50 

36 

1.26 

73 

2.55 

1000 

35.00 

37   ! 

1.29 

74 

2.59 

Calculation   for  six   months. 
[36e] 


DISTRIBUTION  OF  EARNINGS. 


7i  per  cent  table. 


Dottars. 

Interest. 

Dollars. 

Interest 

Dollars. 

Interest. 

1 

.04 

38 

1.38 

75 

2.72 

2 

.07 

39 

1.41 

76 

2.75 

3 

.11 

40 

1.45 

77 

2.79 

4 

.14 

41 

1.49 

78 

2.83 

5 

.18 

42 

1.52 

79 

2.86 

6 

.22 

43 

1.56 

80 

2.90 

7 

.25 

44 

1.59 

81 

2.94 

8 

.29 

45 

1.63 

82 

2.97 

9 

.33 

46 

1.67 

83 

3.01 

10 

.36 

47 

1.70 

84 

3.04 

11 

.40 

48 

1.74 

85 

3.08 

12 

.43 

49 

1.78 

86 

3.12 

13 

.17 

50 

1.81 

87 

3.15 

14 

.51 

51 

1.85 

88 

3.19 

15 

.54 

52 

1.88 

89 

3.23 

16 

.58 

53 

1,92 

90 

3.26 

17 

.62 

54 

1.96 

91 

3.30 

18 

.65 

55 

1.99 

•  92 

3.33 

19 

.69 

56 

2.03 

93 

3.37 

20 

.72 

57 

2.07 

94 

3.41 

21 

.76 

58 

2.10 

95 

3.44 

22 

.80 

59 

2.14 

96 

3.48 

23 

.83 

60 

2.17 

97 

3.52 

24 

.87 

61 

2.21 

98 

3.55 

25 

.91 

62 

2.25 

99 

3.59 

26 

.94 

63 

2.28 

27 

.98 

64 

2.32 

100 

3.62 

28 

1.01 

65 

2.36 

200 

7.25 

29 

1.05 

66 

2.39 

300 

10.87 

30 

1.09 

67 

2.43 

400 

14.50 

31 

1.12 

68 

2.46 

600 

18.12 

32 

1.16 

69 

2.50 

600 

21.75 

33 

1.20 

70 

2.54 

700 

25.37 

34 

1.23 

71 

2.57 

800 

29.00 

35 

1.27 

72 

2.61 

900 

32.62 

36 

1.30 

73 

2.65 

1000 

36.25 

37 

1.34 

74 

2.68 

Calculation    for    six    months. 
1307] 


CHAPTER  XXII. 


7.^  per  cont  table. 


Oollars. 

Interest 

Dollars. 

Interest. 

Dollars. 

Intersst 

1 

.04 

38 

1.43 

75 

2.81 

2 

.07 

39 

1.46 

76 

2.85 

3 

.11 

40 

1.50 

77 

2.89 

4 

.15 

41 

1.54 

78 

2.92 

5 

.19 

42 

1.57 

79 

2.96 

6 

.22 

43 

1.61 

80 

3.00 

7 

.26 

44 

1.65 

81 

3.04 

8 

.30 

45 

1.69 

82 

3.07 

9 

.34 

46 

1.72 

83 

3.11 

10 

.37 

47 

1.76 

84 

3.15 

11 

.41 

48 

1.80 

85 

3.19 

12 

.45 

49 

1.84 

86 

3.22 

13 

.49 

50 

1.87 

87 

3.26 

14 

.52 

51 

1.91 

88 

3.30 

15 

.56 

52 

1.95 

89 

3.34 

16 

.60 

53 

1.99 

90 

3.37 

17 

.64 

54 

2.02 

91 

3.41 

18 

.es' 

55 

2.06 

92 

3.45 

19 

.71 

56 

2.10 

93 

3.49 

20 

.75 

57 

2.14 

94 

3.52 

21 

.79 

58 

2.17 

95 

3.56 

22 

.82 

59 

2.21 

96 

3.60 

23 

.86 

00 

2.25 

97 

3.64 

24 

.90 

61 

2.29 

98 

3.67 

25 

.94 

62 

2.32 

99 

3.71 

26 

.97 

63 

2.36 

27 

l.Ol 

64 

2.40 

100 

3.75 

28 

1.05 

65 

2.44 

200 

7.50 

29 

1.09 

66 

2.47 

300 

11.25 

30 

1.12 

67 

2.51 

400 

15.00 

31 

1.16 

68 

2.55 

500 

18.75 

32 

1.20 

69 

2.59 

600 

22.50 

33 

1.24 

70 

2.62 

700 

26.25 

34 

1.27 

71 

2.66 

800 

30.00 

35 

1.31 

72 

2.70 

900 

33.75 

36 

1.35 

73 

2.74 

i.000 

37.50 

37 

1.39 

74 

2.77 

Calculation    for   six   months. 
[3681 


DISTRIBUTION  OF  EARNINGS. 


7 1  per  cent  table. 


Doilart. 

InteretL 

1    Dollars. 

Interest. 

1    Dollars. 

Interest. 

1 

.04 

38 

1.47 

1         75 

2.91 

2 

.08 

39 

1.51 

76 

2.94 

3 

.12 

1           40 

1.55 

77 

2.98 

4 

.15 

i           ^1 

1.59 

1         78 

3.02 

5 

.19 

1          42 

1.63 

79 

3.06 

6 

.23 

43 

1.67 

80 

3.10 

7 

.27 

44 

1.70 

1          ^^ 

3.14 

8 

.31 

1         45 

1.74 

82 

3.18 

9 

.35 

46 

1.78 

1         83 

3.22 

10 

.39 

47 

1.82 

84 

3.25 

11 

.43 

48 

1.86 

85 

3.29 

13 

.46 

49 

1.90 

i          86 

3.33 

13 

.50 

50 

1.94 

1         87 

3.37 

U 

.54 

i          ^1 

1.98 

88 

3.41 

15 

.58 

1         52 

2.01 

89 

3.45 

16 

.62 

1         53 

2.05 

!          90 

3.49 

17 

.66 

54 

2.09 

91 

3.53 

18 

.70 

!         55 

2.13 

92 

3.56 

19 

.74 

1         56 

2.17 

93 

3.60 

20 

.77 

57 

2.21 

94 

3.64 

21 

.81 

1         58 

2.25 

i          95 

3.68 

22 

.85 

1         59 

2.29 

i          96 

3.72 

23 

.89 

60 

2.32 

97 

3.76 

24 

.93 

61 

2.36 

98 

3.80 

25 

.97 

62 

2.40 

99 

3.84 

26 

1.01 

63 

2.44 

27 

1.05 

1          64 

2.48 

100 

3.87 

28 

1.08 

i          65 

2.52 

200 

7.75 

29 

1.12 

:         66 

2.56 

300 

11.62 

30 

1.16 

J          67 

2.60 

i        400 

15.50 

31 

1.20 

1          68 

2.63 

■        500 

19.37 

32 

1.24 

69 

2.67 

600 

23.25 

83 

1.28 

;         70 

2.71 

700 

27.12 

34 

1.32 

71 

2.75 

800 

31.00 

35 

1.36 

72 

2.79 

900 

34.87 

36 

1.39 

73 

2.83 

1000 

38.75 

37 

1.43 

74 

2.87 

Calculation    for   six   months. 
(369) 


CHAPTER  XXII. 


8  per  cent  table. 


Dollars. 

Interest 

Dollars. 

Interest 

Dollars. 

interest 

1 

.04 

38 

1.52 

75 

3.00 

2 

.08 

39 

1.56 

76 

3.04 

3 

.12 

40 

1.60 

77 

3.08 

4 

.16 

41 

1.64 

78 

3.12 

5 

.20 

42 

1.68 

79 

3.16 

6 

.24 

43 

1.72 

80 

3.20 

7 

.28 

44 

1.76 

81 

3.24 

8 

.32 

45 

1.80 

82 

3.28 

9 

.36 

46 

1.84 

83 

3.32 

10 

.40 

47 

1.88 

84 

3.36 

11 

.44 

48 

1.92 

85 

3.40 

12 

.48 

49 

1.96 

86 

3.44 

13 

.52 

50 

2.00 

87 

3.48 

14 

.56 

51 

2.04 

88 

3.52 

15 

.60 

52 

2.08 

89 

3.56 

16 

.64 

53 

2.12 

90 

3.60 

17 

.68 

54 

2.16 

91 

3.64 

18 

.72 

55 

2.20 

92 

3.68 

19 

.76 

56 

2.24 

93 

3.72 

20 

.80 

57 

2.28 

94 

3.76 

21 

.84 

58 

2.32 

95 

3.80 

22 

.88 

59 

2.36 

96 

3.84 

23 

.92 

60 

2.40 

97 

3.88 

24 

.96 

61 

2.44 

98 

3.92 

25 

1.00 

62 

2.48 

99 

3.96 

26 

1.04 

63 

2.52 

27 

1.08 

64 

2.56 

100 

4.00 

28 

1.12 

65 

2.60 

200 

8.00 

29 

1.16 

66 

2.64 

300 

12.00 

30 

1.20 

67 

2.68 

400 

16.00 

31 

1.24 

68 

2.72 

500 

20.00 

32 

1.28 

69 

2.76 

600 

24.00 

33 

1.32 

70 

2.80 

700 

28.00 

34 

1.36 

71 

2.84 

800 

32.00 

35 

1.40 

72 

2.88 

900 

36.00 

36 

1.44 

73 

2.92 

1000 

40.00 

37 

1.48 

74 

2.96 

Calculation   for   six   months. 
[370] 


CHAPTER  XXIII. 
Distribution  of  Earnings  —  Serial  Plan. 

There  are  a  number  of  plans  in  operation  for  the 
distribution  of  profits.  The  amount  of  interest  which  a 
member  has  in  a  building-,  loan  and  savings  association 
is  indicated  by  the  number  of  shares  which  are  held,  the 
age  of  the  shares  and  the  maturing  value.  Shares  are 
divided  into  various  classes :  installment  or  running 
shares,  prepaid  shares  and  paid-up  shares.  A  member 
who  makes  weekly,  monthly  or  other  periodical  subscrip- 
tions for  installment  shares  indicates  the  amount  of 
periodical  payments  he  desires  to  make  by  the  number  of 
shares  f.)r  which  he  subscribes.  These  payments  are  con- 
tinued until  the  installments  and  the  profits  on  the  shares 
have  caused  them  to  reach  their  maturing  or  par  value, 
when  they  are  wound  up  by  returning  to  the  non-borrow- 
ing members  the  value  of  their  shares  in  cash,  and  to  the 
borrowing  members  their  mortgages  and  cancelled  obli- 
gations. Prepaid  shares,  known  as  partly  paid  up  shares, 
are  issued  by  some  associations  at  a  fixed  price  per  share 
in  advance.  Such  shares  usually  participate  as  fully  in 
the  profits  as  the  regular  installment  shares,  and  when 
the  amount  originally  i)aid  in  for  such  shares,  together 
with  the  dividends  credited  thereon,  reaches  the  maturing 
or  par  value,  then  such  shares  are  matured,  and  are  dis- 
posed of  in  the  same  manner  as  regular  installment 
shares.  Some  a.ssociations,  instead  of  crediting  all  the 
profits  made  on  this  class  of  .shares,  allow  a  fixed  rate  of 
interest  on  the  amount  paid  therefor  at  each  dividend 
period,  which  is  paifl  in  cash  to  the  h(jlder  thereof.     The 

[371] 


CHAPTER  XXIII. 

interest  is  then  deducted  from  the  profits  to  which  the 
shares  are  entitled,  and  the  balance  is  credited  to  the 
shares,  until  such  unpaid  portion  of  the  profits,  added  to 
the  amount  originally  paid,  ecjuals  the  maturing  or  par 
value. 

Division  of  Profits — Serial  Plan.* 

The  purpose  of  the  following  calculations  is  to  show 
different  methods  of  dividing  ascertained  gains  between 
series,  and.  of  course,  between  the  shares  of  a  series. 

The  several  columns  represent : 

Column  A. — Payments  at  the  beginning  of  each  month  beginning 

with  |!l.00  and  continuing  until  $144.00  have  been  paid  in. 
Column  B. — These  figures  represent  1  per  cent  per  annum  on  the 
dues — pajiiients,  namely,  for   the  average  time  the  money  is  in- 
vested. 
Column  C. — Average    investment  one  share  for  one  full  month. 
Column  D. — This  column  of  earning  powers  is  arranged  for  the 
convenience  of  societies  issuing  shares  every  three  months. 

The  proper  use  of  Columns  B,  C  and  D  as  earning  powers  will 
produce  like  results. 

All  the  above  based  on  the  exact  average  time  the  money  has 
been  invested. 
Column  E. — This  column  is  for  societies  issuing  yearly  series,  and 
while  the  figures  do  not  represent  the  exact  time  of  investment, 
the  use  of  them  results  in  a  short  cut  to  the  desired  end. 
Column  F.— This  column  is  like  Column  E,  but  may  be  used  for 
societies  issuing  shares  cver>'  6  months. 

The  figures  have  been  compiled  for  the  use  of  secretaries  who 
may  desire  to  use  any  one  of  the  several  means  of  ascertaining  pro- 
portional gains. 

The  rule  is  to  multiply  the  number  of  shares  in  each  series  by 
the  number  given  in  any  one  of  the  tables,  B,  C,  D,  E  or  F,  for  that 
series,  using  the  sum  of  these  as  the  divisor  into  the  known  total 
gain  of  the  society.  The  total  gain  is  obtained  by  subtracting  the 
liabilities  from  the  assets— dues  paid  being  treated  as  a  liability. 
This  will  give  the  multipliers,  G  in  the  first  example;  .005  in  the 
second ;  .03  in  the  third  ;  .3737  in  the  fourth,  and  .0934  in  the  fifth. 


•  Prepared  by  Michael  J.  Brown,  Philadelphia,  Pa. 
13721 


DISTRIBUTION  OF  EARNINGS. 

The  one  per  centum  for  each  series  in  Column  B,  or  the  average 
investments  in  Column  C,  or  the  earning  powers  in  Columns  D,  E 
or  F,  are  then  to  be  multiplied  by  the  number  thus  ascertained,  to  get 
the  division  of  gain  to  the  series.  The  division  to  each  share  is 
obtained  by  dividing  the  total  gain  of  the  series  by  the  total  number 
of  shares. 

The  figures  given  are  based  on  actual  time,   namely: 

$48  for  --HK'  months  =$1,176  for  one  month.  Interest  at  six 
per  cent  on  $1,176  for  one  month  =  $5.88,  or,  at  one  per  cent,  one- 
sixth  of  that  amount— .98  as  given  in  the  table— see  Columns  A  and 
B,  $48. 

The  examples  that  follow  assume  that  the  total  gain  of  the  so- 
ciety under  the  conditions  named  is  $179.40.  This  may  be  divided  to 
the  series  and  the  shares  by  any  one  of  the  tables  B,  C,  D,  E  or  F. 

By  the  first  three  methods  the  division  will  be  exact,  and  all  will, 
of  course,  agree,  one  with  another.  By  E  and  F  the  division  is  only 
approximately  correct,  and,  therefore,  these  divisions  do  not  agree 
exactly  with  those  made  by  tabks  B,  C  and  D.  E  and  F  are  pre- 
ferred by  some  secretaries  because  they  simplify  the  operation. 

Keeping  in  mind  the  directions  above  given  here  are  examples  of 
the  processes  : 

EXAMPLE  COLUMNS  A  AND  B. 

One  Per 
Payments  Shares  Centum 

$.36  00  30  X  .555  =  $16.65  X  6  =  $99.90 

24  00      40  X  .250  =  10.00  X  6  i=  60.00 

12.00     50  X  .065  =      3.25  X  6  =r     19.50 

$29.90  $179.40 

Gain— $179.40  -^  29.90  =  6. 

Gain  Gain 

per  Scries     Shares  per  Share 

^99  90  -f-  30  =  $3.33 
60.00  -.-  40  =  1.50 
19.50  -f-  50  =   .39 

EXA.MPLE  COLUMNS  A  AND  C. 

Average 
Paymi-nt.t  Shares     1  Month 

$36  fK)  30  X  $666  =  $19,980  X  .005  =  $99.90 

2\m  40  X    300  =    12.000  X  .005  =    60.00 

12  00  .  50  X      78  ~      3.900  X  .005  =    19.50 


$35,880  $179.40 


Gain-$179.40  H-    35.880  =  .005. 
Division  to   Shares  as  above. 

|M7:i| 


CHAPTER  XXIII. 
EXAMPLE  COLUMNS  A  AND  D. 

Payments  Powers     Shares 

$36.00    Ill  X  30  =  $3,330  X  .03  =  $99.90 

24  00    50  X  40  =    2.000  X  .03  =    60.00 

12.00    13  X  50  =       650  X  .03  =    19.50 

$5,980  $179.40 

Gain— $179.40  -^  5,980  =  .03. 
Division  to  Shares  as  above. 


EXAMPLE  COLUMNS  A  AND  E. 
Fractional  Parts  of  Month  Omitted. 

Payments  Powers     Shares     Total 

$36.00    9  X  30  =  $270  X  .3737  =  $100.90 

24  00    4  X  40  =    160  X  .3737  =      59.79 

12  00 1  X  50  =      50  X  .3737  =      18.69 


Gain 


$480 

n— $179.40 

-^  480  =  .3737. 

Gain 
per  Series 

$100.90 
59.70 
18.69 

Gain 
Shares  per  Share 

-:-  30  =:  $3.36 
-h  40  =     1.49 
-^  50  =      .37  37 

$179.38 


EXAMPLE  COLUMNS  A  AND  F. 

Payments  Powers     Shares 

$36  00  36  X  30  =  $1,080  X  .0934  =  $100.90 

2400    16  X  40  =       640  X  .0934  =      59.79 

12^00    4  X  50  1=       200  X  .0934  =      18.69 

$179.38 


$1,920 

G< 

un-$179.40 

-;- 

1,920 

=  .0934 

Gain 
per  Series 

Sh 

Gain 
ares  per  Share 

$100.90 
59.70 
18.69 

-^- 

30  = 
40  = 
50  = 

$3.36 
1.49 
.37  37 

[374] 


DISTRIBUTION  OF  EARNINGS. 


Paymenta 

A 
$144 
143 
142 
141 
140 
139 
138 
137 
136 
135 
134 
133 
132 
131 
130 
129 
128 
127 
126 
125 
124 
123 
122 
121 
120 
119 
118 
117 
116 
115 
114 
113 
112 
111 
110 
109 
108 
107 
106 
105 
104 
103 
102 
101 
100 

99 

98 


One  per  Cent, 
per  Annum 

B 
18.70000 
8.58000 
8.46083 
8.34250 
8.22500 
8.10833 
7.99250 
7.87750 
7.76333 
7.65000 
7.53750 
7.42583 
7.31500 
7.20500 
7.09583 
6.98750 
6.88000 
6.77333 
6.66750 
6.56250 
6.458a3 
6.3.S.500 
6.25250 
6.15083 
6.05000 
5.95000 
5.85083 
5.75250 
5.65500 
5.55833 
5.46250 
5.36750 
5.27333 
5.18000 
5.08750 
4.99582 
4.90500 
4.81500 
4.72583 
4.C:J750 
4.55000 
4.46333 
4.37750 
4.29250 
4.212.^0 
4.12500 
4.04250 


EARNING  POWERS. 

Average  Investment 
for  One  Month  


c 

$10,440 
10.296 
10,153 
10,011 
9.870 
9,730 
9,591 
9,453 
9,316 
9,180 
9.045 
8,911 
8,778 
8,646 
8.515 
8,385 
8,256 
8,128 
8,001 
7.875 
7,750 
7,626 
7.503 
7381 
7,260 
7,140 
7.021 
6,903 
6,786 
6,670 
6,555 
6.441 
6.328 
6,216 
6,105 
5,995 
5,886 
5,778 
5,671 
5.56.5 
5.4  (iO 
5,35  (J 
5,253 
5,151 
5.050 
4.950 
4.851 


Calculated  Powers- 

D       E 


1740 

1716 

1688'/^ 

1668H 

1645 

162<'> 

1598'/4 


1530 

1463 

1397^ 

13335^ 

1271 

1210 

1150^ 

1092"^ 

1036 

981 

927^4 

875/. 

825 


144 


121 


100 


81 


F 
576 


559 


484 


441 


400 


361 


324 


[375] 


CHAPTER  XXllI. 


One  per  Cent. 

Avoratte  Iiive.stmciH 

Payuu-nts 

per  Amnim 

for  One  Month 

Calci<>'>»'>^  Pn,.,..., 

A 

H 

c 

I) 

E 

F 

*  97 

$3.96083 

$4,753 

96 

3.88000 

4.656 

776 

64 

256 

95 

8.80000 

4. 5  no 

94 

3.72088 

4.tt>5 

93 

3.(i42o0 

4,.371 

728'/^ 

92 

3.5().i00 

4,278 

91 

3.48&33 

4.186 

90 

3.41250 

4.005 

682K. 

225 

89 

3.33750 

4,005 

88 

3.26a33 

3,916 

87 

3.190OO 

3,828 

638 

86 

3.11750 

3.741 

85 

3.04583 

3,655 

84 

2.97500 

3,570 

595 

49 

196 

83 

2.90500 

3.486 

82 

2.83583 

3,403 

81 

2.76750 

3,321 

553H 

80 

2.70000 

3,240 

79 

2.63333 

3.160 

78 

2.56750 

3,081 

513^ 

169 

77 

2.50250 

3,003 

76 

2.43833 

2,926 

75 

2.37500 

2,850 

475 

74 

2.31250 

2,775 

73 

2.25083 

2,701 

72 

2.19000 

2,628 

4.38 

36 

144 

71 

2.13000 

2.556 

70 

2.070&3 

2.485 

69 

2.01250 

2.415 

402  J^ 

68 

1.95500 

2,346 

67 

1.89a33 

2.278 

66 

1.84250 

2,211 

3681^ 

121 

65 

1.78750 

2,145 

64 

1.73333 

2,080 

63 

1.68000 

2,016 

336 

62 

1.62750 

1.953 

61 

1.57583 

1,891 

60 

1.52500 

1,&30 

305 

25 

100 

59 

1.47500 

1.770 

58 

1.42583 

1.711 

57 

1.37750 

1.653 

275H 

56 

1.33000 

1,596 

55 

1.2a333 

1,540 

54 

1.23750 

1,485 

247J^ 

81 

53 

1.19250 

1,431 

52 

1.14833 

1.378 

51 

1.10500 

1,326 

221 

50 

1.06333 

1.276 

49 

1.02083 

1.225 

[3761 


DISTRIBUTION  OF  EARNINGS. 


One  per  Cent. 

Average  Investment 

Payments 

per  Annum 

for  One  Month 

i.^aicuidica  i  owtrs 

A 

B 

,   c 

D                  E                 F 

$  48 

$0.98000 

$1,176 

196                 16                 64 

47 

.94000 

1.128 

46 

.900&3 

1,081 

45 

.86250 

1,035 

172/2 

44 

.82.')00 

990 

43 

.788.33 

946 

42 

.75250 

903 

150^                                49 

41 

.71750 

861 

40 

.6&383 

820 

39 

.G5000 

780 

130 

38 

■       .617.50 

741 

37 

.5a583 

703 

36 

.55500 

666 

HI                   9                 36 

35 

.52500 

630 

34 

.49583 

595 

33 

.46750 

561 

93/2 

32 

.44000 

528 

31 

.41333 

496 

30 

.38750 

465 

773^                                 25 

.29 

.36250 

435 

28 

.33833 

406 

27 

.31500 

378 

63 

26 

.29250 

351 

25 

.27083 

325 

24 

.25000 

300 

50                  4                 16 

23 

.23000 

276 

22 

.210a3 

252 

21 

.192.-)0 

231 

38H 

20 

.17500 

210 

19 

.15»i3 

190 

18 

.14250 

171 

28/2                                s 

17 

.12750 

153 

16 

.11333 

136 

15 

.10000 

120 

20 

14 

.08750 

105 

13 

.07583 

91 

12 

.06500 

78 

13                   1                  -1 

11 

.0.5500 

66 

10 

.045a3 

55 

9 

.03750 

45 

W2 

8 

.03000 

36 

7 

.02333 

28 

6 

.01750 

21 

3/2                                    J 

5 

.01250 

15 

4 

.ooa33 

10 

3 

.00500 

6 

1 

2 

.00250 

3 

1 

.00083 

1 

377] 


CHAPTER  XXIII. 

EXAMPLE. 

At  3  per  centum  per  annum  on  one  share  of  $1.00  each  at  the  end 
of  the  48th  month— .98000  X  3  =  |2.94.  See  $48.00— Columns  A 
and  B. 

At  4  per  centum  at  the  end  of  the  64th  month— 11.73333  X  4  = 
$6.93.     See  $64.00— Columns  A  aiid  B. 

At  2  per  centum  per  annum  at  the  end  of  the  6th  month — .01750 
X  2  =  .OVA.    See  $6.00— Columns  A  and  B. 


Rules  and  Tables  Exemplifying  the  Division  of  Profits  Under 
Dexter's  Rule  and  the  Partnership  Rule. 


Application   of  "Dexter's  Rule." 
Rule. 

1.  From  the  profits  at  the  date  of  making  a  report,  deduct  the 
profits  on  all  shares  in  all  series,  as  shown  by  the  last  preceding 
report,  the  remainder  will  be  the  net  profits  for  the  current  term. 

2.  To  find  the  capital  for  the  current  term,  multiply  the  value  per 
share  in  each  series,  as  shown  by  the  last  preceding  report  by  the  num- 
ber of  shares  in  force  in  said  scries  at  the  date  of  making  the  current 
report,  to  the  .'^um  of  these  products  add  the  equalized  dues  for  the 
current  term,  the  result  will  be  the  total  capital  for  the  current  term. 

3.  To  find  the  per  cent  of  profit  for  the  current  term,  divide 
the  net  profits  for  the  current  term  by  the  total  capital  for  the  cur- 
rent term. 

4.  To  find  the  total  capital  of  one  share  in  each  series,  add  to  the 
value  per  share  as  .shown  by  the  last  preceding  statement,  the  equalized 
dues  for  the  current  term.  The  capital  account  for  the  series  issued 
during  or  at  the  commencement  of  the  current  term  will  be  the 
equalized  dues  for  the  current  term. 

5.  To  find  the  profits  per  share,  multiply  the  total  capital  per 
shares  for  the  current  term  by  the  per  cent  of  profit  for  the  cer- 
rent  term. 

Note. — The  phrase  "current  term"  as  here  used  is  intended  to 
mean  the  term  or  period  for  which  the  report  is  being  made,  whether 
annually,  semi-annually,  quarterly  or  otherwise. 

Note. — The  "equalized  dues  for  the  current  term"  is  such  a  sum 
as  invested   for  the   whole  time  will   equal   the  investment  of   the 

[378J 


DISTRIBUTION  OF  EARNINGS. 

monthly  dues  on  one  share,  from  month  to  month,  for  the  same 
time  and  is  the  quotient  obtained  by  dividing  the  sum  of  the  months 
by  the  dues  per  share  for  the  current  term. 

For  the  following  tables  the  equalized  dues  is  obtained  thus : 


$1  00  for 12  months 

1  00  for 11  months 

1  00  for 10  months 

1  00  for 9  months 

1  00  for 8  months 

1  00  for 7  months 

1  00  for 6  months 

1  00  for 5  months 

1  00  for 4  months 

1  00  for 3  months 

1  00  for.    2  months 

1  00  for 1  month 

$12   00  for 78  months 

78  H-  12  =  $6.50    equalized   dues. 


$1   00  for 11  months 

1   00  for 10  months 

1   CO  for 9  months 

1   00  for 8  months 

1   00  for 7  months 

1   00  for 6  months 

1   00  for 5  months 

1   00  for 4  months 

1   00  for 3  months 

1   00  for 2  months 

1   00  for 1  month 

$11  00  for 66  months 

66  -7-  11  =  $6.00  equalized  dues. 


FIRST  ANNUAL  DISTRIBUTION. 


Profits  at  end  of  first  year $73.95 

$73.05  profits  H-  100  shares  =:  profit  of  73  cents  per  share. 

General  Statement. 

Dues.  Profits.         Totals. 

100  shares  at  $12.00  per  share $1,200  00      

100  shares  at  .73  per  share $73  00     $1.273  00 

$1,200  00  $73  00     $1,273  00 

Undivided    profits 95  05 

$1,200  00  $73  05     $1,273  95 


SECOND  ANNUAL  DISTRIBUTION. 

Total  profits  at  end  of  second  year $369  28 

From  which  deduct  as  follows: 

Profits  on   100  shares,  Series  1,  at  73  cents 73   00 

Balance,  or  net  profits  for  year $296  28 


Capital  Account. 


100  shares,  Series  1,  at  $12.78 $1,273  00 

100  shares.  Scries  2 

200  shares  at  $B.50  per  share,  equ.ilized  dues 1,800  00 

Total  capital  participating  in  current  year  profits $8,678  00 

i:!7!M 


CHAPTER  XXIII. 


Distribution  of  Profits. 

$396.88  (profits  for  current  year)  -^  $25.73  (capital  for  current  year)  gives 
11.61  per  cent  of  protit. 

Items.  Series    

Value  per  share  at   last   report 

Equalized  dues   for   current   year 

Total   capital 

Multiplied  by  per  cent  of  piotit 

Gives  profit  per  share  of $2  21  $0  74 


1 

$12  78 
0  60 

2 
"'$000 

$19  28 
11  61 

$  6  60 
11  61 

Value  of  Shares,  one  Shares  in  Each  Series. 


Items.  Series 

Value  of  last  report 

Profit  for  current  year 

Dues    for   current    year 

Present   value 

Total  dues  paid  per  share 


1 

$12  73 

2  21 

12  00 

2 

"$"6'74 
12  00 

$26  94 
24  00 

$12  74 
12  00 

Total   profits , .  .  $2  94  $0  74 


General  Statement. 

Dues.  Profits.         Totals. 

100  shares,   Series  1,  at  $24.00 $2,400  00  

100  shares,  Series  1,  at       2.94 $294  00     $2,694  00 

100  shares,  Series  2,  at     12.00 1,200  00  

100  shares.  Series  2,  at         .74 74  00       1,274  00 


$3,600  00         $868  00     $3,968  00 
Undivided    balance 128  1  28 


$3,600  00         $369  28     $3,969  28 


THIRD  ANNUAL   DISTRIBUTION. 


Total  profits  to  date  of  this  statement $1,050  48 

I'rom  which  deduct  as  follows: 

100  shares.  Series   1,  at   $2.94 $294   00 

100  shares.   Series  2,  at       .74 74  00 


368  00 


Balance,  or  net  profits  for  current  year $682  48 


Capital  Account. 

100  shares.  Series  1,  at  $26.94 $2,694  00 

100  shares.  Series  2.  at     12.74 1,274   00 

1 00  shares.    Series    3 


$3,968  00 

300  shares  at  $6.50  per  share,  equalized  dues 1,950  00 

Total  capital  participating  in  current  year's  profit $6,918  00 

[380J 


DISTRIBUTION  OF  EARNINGS. 

Distribution   of  Profits. 

$682.48    (profits    for    current    year)  -^  $5,918.00    (capital    for    current'  year) 
gives  11.53  per  cent  of  profit. 


Items.  Series 

Value  per  share  at  last  report 

Equalized  dues  for  current   year.. 

Total    capital .  .  . 

Multiplied  by  per  cent  of  profit.. 


1 

$26  94 
6   50 

2 
$12  74 
6  60 

3 

"ia'so 

$33  44 
11  o3 

$19  24 
11  53 

.$6  50 
11  53 

Gives  profit  per  share  of $3  85  $2  21  $0  74 


Value  of  Shares,  one  Share  in  Each  Series. 

Item.s.                       Series   1                      3  3 

Value  at  last   report $26  94          $12  74  •••••••• 

Profit   for  current   year 3   85               2  21  $80  74 

Dues  for  current  year 13  00            12  00  Vi  00 

Present   value $42  79           $26  95  $12   74 

Total  dues  paid  per  share 36  00            24  00  12  00 

Total  profits $6  79             $2  95  $0  74 

General  Statement. 

Dues.            Profits.  Totals. 

100  shares,  Series  1,  at  $36.00 $3.600  00       

100  shares.  Series  1,  at       6.79 $679  00  $4,279  00 

100  shares,  Series  2,  at     24.00 2,400  00       

100  shares.  Series  2,  at       2  95 295  00  2.695  00 

100  shares.  Scries  3,  at     12. 0« 1,200  00       

100  shares.  Series  3,  at         .74 >  .  .  .              74   00  1,374  00 

$7,200  00     $1,048  00  $8,24»  00 

Undivided  profits 3   48  2   48 

$7,200  00     $1,050  ^8  $8,250  48 

FOURTH   ANNUAL  DISTRIBUTION. 

Total  profits  at  end  of  fourth  year $2,301  05 

From  which  deduct  as  follows: 

Profit.s  on  100  .shares.  Series  1,  at  $6.79. 

Profits  on  100  shares.  Series  2.  at     2.95. 

Profits  on   100  shares,   .Scries  3,   at        .74. 

1,048  00 

Balance,  or  net  profits  for  curreiU  year $1,253  05 

Capital  Account. 


$C79 

00 

395 

00 

74 

00 

100  shares   Series  1.  at   $42.79 $1,279  00 

100   shares,    Scrirs   2,   at      26.05 '^.6ff''   00 

100    -.hares,   Scries   3,   at      12.74 1.274    00 

100  shared,   .Series   4 

$8,:!4S   00 

400  (hares,  at  $6.50  per  share,  rquaKzed  4«e8 3,600  00 

Total   c.tpilal   parlicipatinK   in  current   year  profits $10,848   00 


CHATTER  XXIIl. 


Distribution  of  Profits. 

$1,2^3.05   (profits  for  current  year)  H-  $10,848.00  (capital  for  current  year) 
Kives  ll.fiS  per  cent  of  gain. 

Items.              Scries    1                     2                     3  4 

Value  per  share  at   last   report...  $43  70  $20  95  $12  74       

Equalized  dues  for  current  year..               6  50               0  50               6  60  $0  50 

Total   capital $49  20           $3S  46           $10  34  $6  60 

Multiplied  by  per  cent  of  profit..              11  00             11  66             11  66  11   65 


1 

$43  70 

5  69 

12  00 

2 
$26.95 
3  86 
12  00 

3 
$12  74 
2  22 
12  00 

4 

"$'6'75 
12  00 

$60  4« 
46  00 

$43  81 
36  00 

$26  06 
24  00 

$12  76 
13  00 

Gives  profit  per  share  of $6  CO  $3  80  $2  32  $0  76 


Value  of  Shares,  one  Share  in  Each  Series. 

Items.  Series    

Value  at   last   report 

Profit   for  current  year 

Dues  for  current  year , 

Present  value 

Total  dues  paid  per  share 

Total    profits $18   48  $6  81  $2  06  $0  75 


General  Statement. 

Dues.  Profits.        Totals. 

100  shares.  Series  1.  at  $48.00 $4,800  00       

100  shares.  Series  1.  at     l-'.48 $1,248  00     $6,048  00 

100  shares.  Series  2,  at     36.00 3,600  00       

100  shares.  Series  2,  at       6.81 68100       4,28100 

100  shares.  Series  3,  at     24.00 3,400  00       

100  shares.  Series  3,  at       2.96 206  00       2,696  00 

100  shares.  Series  4,  at     12.00 1.200  00       

100  .shares.  Series  4.  at         .75 75  00        1.275  00 


$12,000  00     $2,800  00  $14,300  00 
Undivided  profits 1  05  1  05 


$12,000  00     $2,301  05  $14,301  05 


FIFFH   ANNUAL  DISTRIBUTION. 


Total  profits  at  end  of  fifth  year $4,325  75 

From  which  deduct  as  follows: 

Profits  on  100  shares.  Series  1,  at  $12.48 $1,248   OO 

Profits  on  100  shares.  Series  2,  at       6.81 681  00 

Profits  on  100  shares,  Series  8,  at      3.96 206  00 

Profits  on  100  shares.  Series  4,  at         .75 75  00 


2,300  00 
Balance  or  net  profits  for  current  year $2,026  76 

[382] 


DISTRIBUTION  OF  EARNINGS. 

Capital  Account. 

100  shares,   Series  1,  at   $60.48 $6,048  00 

100  shares.  Series  2,  at     42.81 4,281  00 

100  shares,   Series  3,  at     26.96 2,696  00 

100  shares,   Series  4,  at     12.75 1,275  00 

100  shares.  Series  5 


$14,300  00 

500  shares,  at  $6.50  per  share,  equalized  d»»es 3,250  00 


Total  capital  participating  in  current  year  profits $17,550  00 

Distribution  of  Profits. 

$2,025.75   (profits  for  current  year)  —  $17,550.00   (capital  for  current  year) 
give*  11.64  per  cent  of  gain. 

Items.  Series    1  2  3  4  5 

Value  per  .share  at  last  report $60  48     $42  81     $26  96     $12  75      

Equalized  dues  for  current  year 6  50         6  50  6  60         6  50         6  50 


Total   capital    $66  98  $49  81  $33   46  $19  2.i  $6  60 

Multiplied  by  per  cent  of  profit 11  54  11   64  11   54  11  54  11  54 

Gives  profit  per  share  of $7  72  $5  69  $3  86  '   $2  22  $0  75 

Value  of  Shares,  one  Share  in  Each  Series. 

Items.              Serifs    1  2  3  4  6 

Value  at  last  report $60   48  $42  81  $26  96  $12  75      

Profit  for  current  year 7  72  5  69  3  86  2  22  $  0  75 

Dues  for  current  year 12  00  12  00  12   00  12  00  12  00 


Present  value $80  20     $60  50     $42  82     $26  97     $12  76 

Total  dues  paid  per  .share 00  00       48  00       36  00       24  00        12  00 

Total   profits $20  20     $12    60       $6  86        $2  97        $0  75 

General  Statement. 

Dues.  Profits.         Totals. 

100  shares.  Series  1,  at  $60.00 $6,000  00       

100  i-harcs.  Series  1,  at     20.20 $2,020  00     $8,020  00 

100  shares.  Series  2,  at     48.00 4,800  00       

100  shares.   Series  2  at      12.60 1,260  00       6.050   00 

100  shares.  Series  3,  at     36.00 8,600  00       

100  shares,  Series  8.  at       6.82 682  00        J.282   00 

100  shares.  Scries  4,  at     24.00 2,400  00       

100  shares,  Series  4,  at       2.97 297   00       2.697  00 

100  shares.  Series  5,  at     12.00..      1,200  00       

100  iJiares,  Series  6.  at          .75 76  00        1.275  00 


$18,000  00     $4,324  00  $22,324   00 
Undivided  profits 1   75  1   75 

$18,e00  00     $4,325  76  $22,326  76 

SIXTH  ANNUAL  DISTRIBUTION. 


Total  profits  at  end  of  5  years  and  11  months $7,057  31 

From   which  deduct  as  follows: 

Profits  on   100  shares.   Scries  1,  at  $20.20 $2,020  00 

Profits   on    100  shares.    Series   2,   at      12.60 l.S.'iO  00 

Profits   on    100   shares,    Series   8,   at        6  82 082   00 

Profits  on   100  shares,   Series  4.   at        2.97 297   00 

Profits  on   100  shares.   Scries  5.  at          .76 76  00 


4.324   00 
Balance  or  net  profits  for  current  Icrni $9,733  81 

I383J 


CHAPTER  XXII  I. 

Capital  Account. 


100  shares.  Series  I,  at  $60.20 $8,020  00 

100  shartt.,  Series  t,  al     00.50. O.O.'iO  00 

100   ,' hares,   Series   8,   at      42.82 4,2S2   00 

100  .'.liarcK,  Series  4,  at     Sfi.i»7 2,(i»7   00 

100  share.*-.  Series  5,  at      12.75 1,2V5  00 

100  shares.  Scries  6 

-— -  ^  ^  '  —  $22,»24  00 

600  shares  at  $6.00  pi-r  .--liare,  eqiiali/.cd  dues 3,000  00 

Total  capital  participating  in  current  term  profits.  .  .  $25,924  00 


Distribution   of  Profits. 

$2, 73a. at   (profits  for  curreiU  term)  -r-  $26,924.00  (capital  for  current  term) 
gives  10.50  per  cent  of  profit. 

Items.              Series     .  .        1                2                3  4                 5  6 

Value  per  share  at  last  report.   $60  20     $60  50     $42   82  $26  97      $12  75      

Equalized  dues  for  current  year 

(11   months) 0  00          6  00         0  00  0  00          6  00  6  00 

Total    capital $80  20     $66  50     $48  82  $32  97     $18  75  $  6  00 

Multiplied  by  per  cent  of  profit    10  50       10  50       10  50  10  50       10  50  10   50 


Gives  profit  per  share  of.       $9  05        $6  98        $5   12        $3   46       $1  96        $0  63 


Value  of  Shares,  one  Share  in  Each  Series. 

Items.              Serie."     .  .        1  2  3  4  5  6 

Value  per  share  at  last  report.   $80  20  $60  50  $42   82  $26  97  $12  75      

Profit   for  current   year 9  05  6  98  5   12  3   46  1  96  $  0  63 

Dues  for  current  year 11  00  11  00  11  00  11  00  11  00  11  00 

Present    value $100  25  $78  48  $58  94  $41   43  $25  71  $11  63 

Total  dues  paid  per  share...      71  00  59  00  47  00  35  00  23  00  11  00 

Total  profit  per  share...    $29  26  $19  48  $11   04  $6  43  $2  71  $0  68 


General  Statement. 


Dues.  Profits.  Totals. 

100  shares,  Series  1,  at  $71.00 $7,100  00       

100  shares,  Series  1,  at     29.26 $2,925  00   $10,025  00 

100  shares,  Serie.s  2,  at     59.00 5,900  00       

100  shares,  Series  2,  at     19  48 1,948  00        7,848  00 

100  shares.  Series  3,  at     47.00 4,700  00       

100  shares.  Series  3,  at     11.94 1,194   00        5,894   00 

100  .shares.  Scries  4,  at     35.00 3,500  00       

100  shares,  Series  4,  at       6.43 643  00        4,143  00 

100  shares.  Series  5,  at     23.00 2,300  00       

100  shares,  Series  5,  at        2.71 271   00       2,571  00 

100  shares,  Series  6,  at     11.00 1,100  00       

100  shares,  Series  6,  at         .03 ...  , 63  00       1,163  00 


Uxidividled  profits. 


$24,600  00     $7,057  31  $31,657  81 
(3841 


DISTRIBUTION  OF  EARNINGS. 


Statement  shozvhig  the  increase  in  the  value  of  Shares  by 
"Dcxtcr's  Rule"  of  Division  of  Profits. 


Value.              Series.  1 

Value  January  1,  1S81 $12  73 

Value  January  1.  1882 26  94 

Value  January   1,   1883 42   79 

Value  January  1,  1884 60  48 

Value  January  1.  1885 80  20 

Value  December  1,  1885 100  25 


$12 

74 

26 

99 

$12 

74 

42 

81 

26 

96 

$12  75 

fiO 

50 

42 

8-' 

26  97 

78 

48 

58 

94 

41  43 

$12 


11    62 


Statement  shozving  the  increase  in  the  value  of  Shares  by  the 
"Partnership  Rule"  of  Division  of  Profits. 


Value.              Series.  1 

Value  January    1.   1881 $12  73 

Value  January  1.   1882 26  93 

Value  January  1,  1883 42   73 

Value  January  1,   1884 60  21 

Value  January  1,   1885 79  62 

Value  December  1,   1885 99  20 


$12  73 

26  99 

$12  74 

42  86 

27  05 

$12  76 

60  55 

43  06 

27  13 

$12  78 

78  47 

59  35 

41  85 

25  95 

$11  67 


Rule  for  Computing  Interest,  and  table  showing  interest  on  One 
Dollar  at  3  per  cent  "average  time"  from  I  to  i^o  Months. 


H 

H 

►-1 

3 

H 

3 

H 

3 

H 

3 

H 

1-1 

3 

3 

3 

B 

3 

n 

3 

n 

H 

n 

<» 

f> 

n 

1 
n 

n 

•n 

1 

1 
n 

n 

1?0 

.8000 

100 

.2500 

80 

.2000 

60 

.1500 

40 

.1000 

20 

.0500 

119 

.2975 

99 

.2475 

79 

.1975 

59 

.1475 

89 

.0975 

19 

.0475 

llfl 

.2950 

98 

.2450 

78 

.1950 

58 

.1450 

38 

.0950 

18 

.0450 

117 

.2925 

97 

.2425 

77 

.1925 

57 

.1425 

37 

.0925 

17 

.0425 

116 

.2900 

96 

.2400 

76 

.1900 

56 

.1400 

36 

.0900 

16 

.0400 

lift 

.2875 

95 

.2375 

75 

.1875 

55 

.1375 

35 

.0875 

15 

.0375 

114 

.2850 

94 

.2350 

74 

.1850 

54 

.1350 

34 

.0850 

14 

.0350 

113 

.2825 

93 

.2325 

73 

.1825 

58 

.1325 

33 

.0825 

13 

.0325 

112 

.2800 

92 

.2300 

72 

.1800 

52 

.1300 

82 

.0800 

12 

.0300 

111 

.2775 

91 

.2275 

71 

.1775 

51 

.1275 

31 

.0775 

11 

.0275 

no 

.2750 

90 

.2250 

70 

.17.50 

50 

.1250 

80 

.0750 

10 

.0250 

109 

.2725 

89 

.2225 

69 

.1725 

49 

.1225 

29 

.0725 

09 

.0225 

108 

.2700 

88 

.2200 

68 

.1700 

48 

.1200 

28 

.0700 

OS 

.0200 

107 

.2675 

87 

.2175 

07 

.1075 

47 

.1175 

27 

.0675 

07 

.0175 

lOfl 

.2050 

86 

.2150 

66 

.1650 

40 

.1150 

26 

.0650 

06 

.0150 

10ft 

.2625 

85 

.2125 

05 

.1625 

45 

.1125 

25 

.0625 

05 

.0125 

104 

.2600 

84 

.2100 

64 

.1600 

44 

.1100 

24 

.0600 

04 

.0100 

108 

.2575 

H8 

.2075 

63 

.1575 

43 

.1075 

23 

.0575 

08 

.0075 

102 

.25.50 

82 

.2050 

62 

.1550 

42 

.1060 

22 

.0550 

02 

.0050 

101 

.2625 

81 

.2025 

61 

.1525 

41 

.1026 

21 

.0525 

01 

.0025 

RfEE — To  find  the  interest  for  any  given  series  multiply  the  "Dues  Capital" 
of  the  series  by  the  amount  of  interest  set  opposite  the  average  number  of 
monthii  the  scries  has  been  in  force. 

For  example — What  is  the  interest  on  a  scries  80  months  old,  having  $20,000 
of  "Dues  Capital"?  The  average  time  is  40  months.  The  interest  at  3  per  cent 
on  $1   for  40  month.s  is  10  cents.     $20,000  X  10  =  2,000. 

[38.5] 


CHAPTER  XXIII. 


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£  «  «     ^ 


S  '-  " 


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Serica 


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[386] 


DISTRIBUTION  OF  EARNINGS. 


gum 


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1087 


CHAPTER  XX HI. 

Simple  Interest. 

The    following   method    for   calculating   simple   interest 
is  one  found  to  be  most  practical : 

Interest  is  usually  calculated  on  the  basis  of  3(10  days  to  the  year. 

The  simplest  method  of  computing  interest  is  to  do  it  at  the  rate 
of  I)  per  cent  per  annum,  and  add  or  subtract  when  it  is  higher  or 
lower  than  that. 

The  interest  for  00  days  at  G  per  cent  per  annum  is  equal  to  as 
many  cents  as  there  are  dollars,  or  in  other  words,  is  1  per  cent  of 
the  principal. 

The  reason  of  this  is  obvious.  6  per  cent  per  annum  is  J/2  per 
cent  per  month,  or  1  per  cent  for  two  months,  or  60  days. 

The  interest  for  $750,  $225,  $327.50,  for  60  days,  at  6  per  cent  is 
$7.50.  $2.25,  $3.28. 

Having  the  interest  for  6o  days,  the  interest  for  any  shorter  time 
may  be  found  by  the  use  of  all  aliquots  of  6o. 

Aliquots  of  60. 
30=:J/2,  20=»^,  15=^,  ]2=K, 

10=%,  6=Mo,  5=M2,  4=M.5. 

3=1^,   2=:Uo,   l=l/60. 


When  the  number  is  not  an  aliquot  of  6o: 
For     7  take 

. .  6  and     1. 

"      8    "     

"     14     ••     

"    19    ••     

..6     "      2. 

..12     "      2. 

15     "      4 

•    26    ••     

"    27    ••     

.  .20     "      6. 
15     "     12 

•    29    ••     

•■    35    '•     '.. 

'    38    "     

. .   1     off  30. 
.  .30  and    5. 
..30,  6,  and  2. 

••    43    ••     

..30, 12,  and  1 

■'    45    ••     

..15   off   60. 

•'    85  add 20  and    5. 

1.     To  find  the  interest  on  $375.67,  for  15  days,  at  6  per  cent  per 
annum : 

4)3.76-^interest  for  60  days. 

.94=interest   for  15  days. 
[3881 


DISTRIBUTION  OF  EARNINGS. 

Interest  is  seldom  computed  on  cents  by  secretaries.  For  50  cents 
$1  is  added  to  dollars;  less  than  50  cents  are  rejected. 

To  find  the  interest  for  a  number  of  days  that  is  an  aliquot  of  6o, 
we  take  that  part  of  the  interest  for  6o  days,  for  30  days  we  take 
Vi,  20  days  Vs,  15  days  J4>  etc.  When  the  number  is  not  an  aliquot  it 
is  made  up  of  aliquots,  as  shown  in  the  preceding  table. 

2.  To  find  the  interest  on  $675.15,  for  27  days,  at  6  per  cent  per 
annum: 

$6.75=interest  for  60  days. 


1.687=J4  or  for  15  days. 
1.35  =y3  or  for  12  days. 


3.037=interest  for  27  days. 

The  following  table  shows  the  interest  on  any  amount 
from  $1  to  $5,000  for  any  number  of  weeks  from  i  to  52. 
From  this  table  the  interest  at  any  other  rate  per  cent  can 
be  found  by  aliquot  parts  as  explained  before. 


I518UI 


CHAPTER  XXIII. 


a 


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6«» 


[390] 


CHAPTER  XXIV. 

Legal  Forms  for  Associations. 

In  order  to  save  time  and  labor,  to  facilitate  and  to 
expedite  business,  and  to  secure  accuracy  and  uniformity, 
every  association  should  be  supplied  with  a  set  of  blank 
legal  forms  for  the  proper  transaction  and  recording  of 
its  business.  Such  papers  must  be  drawn  in  accordance 
with  the  statutes  and  with  the  rules  of  associations.  Since 
the  statutes  differ  and  rules  are  not  at  all  uniform,  it  is 
not  possible  to  present  a  full  set  of  model  blanks. 

Specimen  Blanks. 

The  forms  printed  in  this  chapter  are  in  general  use. 
They  are  given  without  endorsement  or  criticism  in  the 
expectation  that  before  l)eing  followed  by  any  association 
they  will  be  examined  carefully  to  see  if  they  are  in 
proper  form  for  use  by  that  particular  association.  An 
examination  of  these  forms  will  indicate  anew  the  neces- 
sity for  closer  co-operation  among  building  associations 
so  as  to  secure  more  uniform  methods  of  operation. 


1891] 


CHAPTER  XXIV. 

ARTICLES  OF  INCORPORATION   (OHIO). 

These  Articles  of  Incorporation  of  The 

Building  and  Loan  Company. 

IWitness,  That  we,  the  undersigned,  natural  persons,  all  of  whom 
are  citizens  of  the  State  of  Ohio,  desiring  to  form  a  corporation,  for 
profit,  under  the  general  corporation  laws  of  said  state,  do  hereby 
certify : 

1.  The  name  of  said  corporation  shall  be  The 

Building  and  Loan  Company. 

2.  Said  corporation  is  to  be  located  in 

County,  Ohio,  and  its  principal  business  there  transacted. 

3.  Said  corporation  is  formed  for  the  purpose  of  raising  money 
to  be  loaned  among  its  members,  as  provided  by  law. 

4.  The  capital  stock  of  said  corporation  shall  be 

dollars,  divided  into shares  of 

dollars  each. 

In  Witness  Whereof,  We  have  hereunto  set  our  hands,  this 

day  of 19.... 


STATE  OF  OHIO,  ) 

County  of |    "' 

Personally  appeared  before  me,  the  undersigned,  a  Notary  Public 

within  and  for  said  County,  this day  of 19 ^ 

the  above-named 


who  each  severally  acknowledged  the  signing  of  the  foregoing  arti- 
cles of  incorporation  to  be  his  free  act  and  deed,  for  the  uses  and 
purposes  therein  mentioned. 

Witness  my  hand  and  official  seal  on  the  day  and  year  aforesaid. 


.  SKAI. 

Notary  Public 


[392J 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


.} 


STATE  OF  OHIO, 
County  of ) 

I Clerk  of  the  Common  Pleas,  within  and  for 

the  County  aforesaid,  do  hereby  certify  that 

whose  name  is  subscribed  to  the  foregoing  acknowledgment  as  a 
Notary  Public  was  at  the  date  thereof  a  Notary  Public  in  and  for 
said  County,  duly  commissioned  and  qualified,  and  authorized  as  such 
to  take  said  acknowledgment ;  and  further,  that  I  am  well  acquainted 
with  his  handwriting,  and  believe  that  the  signature  to  said  acknowl- 
edgment is  genuine. 

In  Witness  Whereof,  I  have  hereunto  set  my  hand  and  affixed 

the  seal  of  said  Court,  at ,  Ohio,  this day 

of 19.... 


Qerk. 


By Deputy. 


A 


United  Statks  of  America,  Ohio, 

Office  of  the  Secretary  of  State    ''  '*' 

I Secretary  of  State  of  the  State  of  Ohio, 

do  hereby  certify  that  the  foregoing  is  a  true  copy  of  the  Articles  of 

Incorporation  of  "The Building  and  Loan 

Company"  filed  in  this  office  on  the  ....  day  of 19 

and  recorded  in  volume ,  page ,  of  the  Records  of 

Incorporation. 

In  Testimony  Whereof,   I   have  hereunto  subscribed  my  name 

and  affixed  my  seal  of  office,  at  Columbus,  the.  . .  .day  of , 

A.  D.  19 


Secretary  of  State. 
By Deputy. 


393) 


CHAPTER  XXIV. 


SUBSCRIPTION  LIST 


The Building  and  Loan  Association 

of 


We,  the  undersigned,  hereby  agree  to  take  the  amount  of  shares 

of  stock  in  The Building  and  Loan  Association 

of as  set  opposite  our  names. 

Shares Weekly  Dues Admission  Fee 

In  order  to  facilitate  the  permanent  organization  of  said  associa- 
tion, we  hereby  waive  the  statutory  notice  of  thirty  days,  for  holding 
of  an  election  for  Board  of  Directors  of  said  association. 


Name. 

Residence. 

Shares. 

PROXY  ON  STOCK. 

Be  It  Known,  that  I,  the  undersigned  stockholder  in 

The Building  and  Loan  Association, 

do  hereby  appoint 

true  and  lawful  attorney,  with  power  of  substitution  and  revocation, 

for and  in iiame. .,  to  vote  at  the 

meeting  of  stockholders  in  said  association,  to  be  held  on 

,  the day  of 19 

Done  at on  this day  of 

19.... 


[884] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

BOND  OF  OFFICERS  (OHIO). 

Know  all  Men  by  these  Presents : 

That as   principal, 

and as   sureties, 

are  firmly  held  and  bound  unto  The Building 

and  Loan  Company,  a  corporation  under  the  Laws  of  Ohio,  in  the 

sum  of thousand  ($ 000.00)  dollars,  to  be  paid 

to  said  corporation,  its  successors  or  assigns,  for  which  payment  well 
and  truly  to  be  made  we  bind  ourselves,  our  heirs,  executors,  and 
administrators,    jointly    and    severally,    firmly    by    these    presents. 

SE.^LED  with  our  seals,  dated  the day  of 

one  thousand  nine  hundred  and 

The  Condition  of  the  above  obligation  is  such  that  whereas  the 

said was  on  the day 

of A.  D.  19.  . . .,  duly as 

of  said  corporation. 

Now,  therefore,  if  the  said 

shall  faithfully  perform  all  and  singular  the  duties  incumbent  upon 
him  as  such  officer  aforesaid  as  prescribed  by  the  Constitution  and 
By-Laws  of  said  corporation  (which  are  made  part  hereof)  and 
according  to  the  orders  of  the  Board  of  Directors  of  said  corpora- 
tion, and  shall,  when  duly  requested  by  the  Board  of  Directors  of 
said  corporation,  turn  over  to  such  person  or  persons  as  it  may  desig- 
nate, all  books,  papers,  receipts  or  other  documents,  money  or  moneys, 
or  other  property  of  any  nature  whatsoever,  belonging  to  said  corpo- 
ration or  to  which  the  said  corporation  may  have  the  right  of  pos- 
session, then  these  presents  to  be  void,  otherwise  to  remain  in  full 
force  and  virtue. 

Signed  and  sealed  in  our  presence: 

j Seal 

\ Seal 

( Seal 


Note. — Bonds  are  backed  for  filing  as  follows : 

Bond  of as of  The 

Building  and  Loan  Company. 

Attorney. 

[395] 


CHAPTIiR  XXIV. 

MORTGAGE  (OHIO). 

Know  all  Men  by  these  Presents: 


That 


in  consideration  of 

dollars,  the  estimated  value  of 

shares  of  its  capital  stock,  advanced  and  paid  to  said 

by 

The Building  and  Loan  Company, 

of ,  Ohio,  a  Corporation  under  the  Laws  of  Ohio, 

the  receipt  of  which  is  hereby  acknowledged,  do  hereby  GRANT, 
BARGAIN.  SELL  and  CONVEY  to  the  said  Building  and  Loan 

Company,  its  successors  and  assigns,  forever,  the  following 

estate,  situated  in  the  County  of State  of 

and  bounded  and  described  as  follows : 


and  all  the  ESTATE,  TITLE,  and  INTEREST  of  the  said  grantor 
either  in  Law  or  in  Equity,  of,  in  and  to  the  said  premises :  TO- 
GETHER with  all  the  privileges  and  appurtenances  to  the  same 
belonging,  and  all  the  rents,  issues,  and  profits  thereof;  TO  HAVE 
AND  TO  HOLD  the  same,  in  fee,  to  the  use  of  said  Building  and 
Loan  Company,  its  successors  and  assigns,  forever. 

AND  the  said 

for and   for heirs,  executors,  and  administrators,  do 

hereby  COVENANT  with  the  said  Building  and  Loan  Company,  its 

successors  and  assigns,  that is  the  true 

and  lawful  owner  of  the  said  premises  and  have  full  power  to 
convey  the  same,  and  that  the  title  so  conveyed  is  CLEAR,  FREE 

and  UNINCUMBERED;  and  further,  that will  WARRANT 

and  DEFEND  the  same  against  the  claims  of  all  persons  whom- 
soever. 

[396] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

Provided,  nevertheless,  that,  whereas  the  said 

ha. .   become  a  member  of  said  Building  and 

Loan  Company,  and  subscribed  to share      therein  to  be  paid 

in  weekly  installments  of per  share,  and  received  in  advance 

from  said  Company  said  $ ,  the  estimated  value  of  said 

share ,  shall  pay  said  Company,  according  to  the  Constitution 

and  By-Laws,  without  demand  therefor  any  fines  and  assessments 

thereby  imposed,  and  said  weekly  installments  of per 

share  as  premium  on  said  advance,  and  an  interest  upon  said  $ 

in  weekly  payments  of cents  per  share  for  the  first  year, 

and  thereafter  a  weekly  sum  or  amounts  sufficient  to  keep  the  interest 
upon  the  amount  due  at  the  beginning  of  each  year  at  the  rate  of  six 

per  cent  per  annum  until  the  full  amount  of  said shares  shall 

have  been  paid,  with  all  dues,  premiums,  interest,  fines,  etc.,  thereon 
according  to  the  Constitution  and  By-Laws,  and  shall  pay  all  taxes, 
assessments,  insurance,  ground  rents,  or  charges  of  any  kind  that 
may  become  due  and  payable  on  said  property ;  and  in  case  of  default 
in  making  any  of  said  payments  for  a  period  of  ninety  days,  and  a 
suit  of  foreclosure  be  brought  therefor,  then  the  amount  of  the  face 
of  this  mortgage,  with  all  arrearages  thereon,  less  the  credits  paid 
upon  the  principal,  shall  become  due  and  payable  at  once,  all  as  pre- 
scribed by  the  said  Constitution  and  By-Laws;  and  if  the  said 
shall  comply  with  all  the  foregoing  obliga- 
tions, then  these  presents  shall  be  void. 

In  Witness  Whereof,  the  said 

who  hereby  release right  and  expectancy  of  dower  in  said 

premises,   ha.,    hereunto   set hand   this day   of 

in  the  year  of  our  Lord,  one  thousand  nine  hundred  and 

(19....). 

Signed,  sealed  and  acknowledged  in  presence  of  us : 


\m] 


CHAPTER  XXIV. 

The  State  of  Ohio.  County  of ss. 

Be  it  remembered,  That  on  the day  of 

in  the  year  of  our  Lord,  one  thousand  nine  hundred  and 

(19....).  before  me,  the  undersigned,  a  Notary  Public,  in  and  for 
said  County,  personally  came 

the  grantor  in 

the  foregoing:  mortgage,  and  acknowledged  the  signing  and  sealing 

thereof  to  be voluntary  act  and  deed,  for  the  uses  and 

purposes  therein  mentioned. 

In  Testimony  Whereof,  I  have  hereunto  subscribed  my  name  and 
aflbced  my  notarial  seal  on  the  day  and  year  aforesaid. 

Notary  Public County,  Ohio. 


.19. 


The  within  mortgage  being  fully  paid  and  satisfied,  may  be  can- 
celled of  record,  by  order  of  the  Board  of  Directors. 

The Building  and  Loan  Company, 

By President. 

and ,    Secretary. 


a 

H     . 
o    o 


be  <4M 
.S    o 


ca 


P4  b 


CQ 


o 
O 


c 

3 
O 

U 


-•     U     11 
:  ry    bo 


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-a 


oi 


cu 


[S98] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 

MORTGAGE  CLAUSE  FOR  INSURANCE  POLICIES. 

It  Being  Hereby  Understood  and  Agreed,  That  this  insurance,  as 
to  the  interest  of  the  Mortgage  or  Trustee  only  therein,  shall  not  be 
invalidated  by  any  act  or  neglect  of  the  Mortgagor  or  Owner  of  the 
property  insured,  or  by  the  occupation  of  the  premises  for  purposes 
more  hazardous  than   are  permitted   by  the  terms   of  this   Policy. 
Provided,  Also,  that  in  case  the  Mortgagor  or  Owner  neglects  or 
refuses  to  pay  any  premium  due  under  this  Policy,  then,  on  demand, 
the  Mortgagee  or  Trustee  shall  pay  the  same.     Provided,  Also,  that 
the  Mortgagee  or  Trustee  shall  notify  this  Company  of  any  change 
of  ownership  or  increase  of  hazard  which  shall  come  to  his  or  her 
knowledge  and  shall  have  permission  for  such  change  of  ownership 
or  increase  of  hazard  duly  indorsed  on  this  Policy.    And  Provided 
Further,  That  every  increase  of  hazard  not  permitted  by  the  Policy 
to  the  Mortgagor  or  Owner  shall  be  paid  for  by  the  Mortgagee  or 
Trustee  on  reasonable  demand,  and  after  demand  made  by  this  Com- 
pany up,  and  refusal  by,  the  Mortgagee  or  Owner  to  pay,  accord- 
ing to  the  established  schedule  of  rates.     It  is,  however,  understood 
that  this  Company  reserves  the  right  to  cancel  this  Policy,  as  stipu- 
lated in  the  printed  conditions  in  said  Policy;  and  also,  to  cancel  this 
agreement  on  giving  ten  days'  notice  of  their  intention  to  the  Trustee 
or  Mortgagee  named  therein,  and  from  and  after  the  expiration  of 
the   said  ten  days,  this  agreement   shall   be  null   and   void.     It  is 
Further  Agreed,  That   in   case  of   any   other   insurance  upon  the 
property  hereby  insured,  then  this  Company  shall  not  be  liable  under 
this  Policy  for  a  greater  portion  of  any  loss  sustained  than  the  sum 
hereby  insured  bears  to  the  whole  amount  of  insurance  on  said  prop- 
erty, issued  to  or  held  by  any  party  or  parties  having  an  insurable 
interest  therein.     It  is  Also  Agreed,  That  whenever  this  Company 
shall  pay  the  Mortgagee  or  Trustee  any  sum   for  loss  under  this 
Policy,  and  shall  claim  that  as  to  the  Mortgagor  or  Owner,  no  lia- 
bility  therefor   exists,   it   shall   at   once,   and   to  the   extent   of   such 
payment,   be   legally   subrogated    to   all   the    rights    of   the   party   to 
whom  such  payments  shall  be  made,  under  any  and  all   securities 
held  by  such  party  for  the  payment  of  said  debt.    But  such  subroga- 
tion shall  be  in  subordination  to  the  claim  ©f   said  party   for  the 
balance  of  the  debt  so  secured.    Or  .said  Company  may,  at  its  option, 
pay  the  said  Mortgagee  or  Trustee  the  whole  debt  sw  secured,  with 
all  the  interest  which  may  have  accrued  thereon  to  the  date  of  such 

1399] 


CHAPTER  XXIV. 

payment,  and  shall  theretipon  receive  from  the  party  to  whom  such 
payment  shall  be  made  an  assiji^nmcnt  and  transfer  of  said  debt,  with 
all  securities  held  by  said  parties  for  the  payment  thereof. 

This  slip  being  attached  to  Policy  No of  the 

Insurance  Company,  forms  part  of  said  Policy. 

Dated 

Secretary. 


UOOt 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


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[401] 


CHAPTER  XXIV. 

WAIVER  OF  MECHANICS'  LIEN  (OHIO). 

Ohio 19. . . . 

In  consideration   of   one  dollar   and   other   valuable   considera- 
tions, the  receipt  of  which  is  hereby  acknowledged 

do  hereby  agree  with 

The Building  and  Loan  Company 

of County,  Ohio. 

that will    not   take   a   mechanics'   lien    on   the    real    estate 

of    situated 

County,  Ohio,  to  secure  amount  due  or  to  become  due 

for  material  furnished  or  labor  performed  in  or  about  the  erection 

of    

on  said  real  estate,  under  contract  made  with  the  said 

and hereby  waive  any  right  of  priority  of  lien 

might  have  on  said  real  estate  in  favor  of  said  Company. 


COLLATERAL  NOTE  FOR  LOAN  ON  PASS  BOOK. 

$ 19.... 

after  dalt promise  to  pay 

to  the  order  of 

The Building  and  Loan  Association, 

of 

Dollars, 

with per  week  interest,  the  same  being per  cent, 

on  the  amount  of  loan,  and  herewith  transfer  my  Pass  Book 
No to  said  Association,  to  be  held  as  collateral  until  pay- 
ment of  this  loan,  said  loan  being  subject  to  the  Constitution  and 
By-Laws  of  the  Association. 

Value   received , 

No Due 


STUB. 


Date. 


No Due. 

1402] 


LEGAL  FORMS  FOR  ASSOCIATIONS. 


ATTORNEY'S  REPORT. 

To  the  Board  of  Directors  of 

The Building  and  Loan  Association, 

of 

Gentlemen : 

I  find  that  the  title  to  property  of 


situated 


is  in  the  name  of  said  party,  as  the  same  appears  indexed  of  Record 

in  the  Recorder's  Office  of County,  State 

of  Ohio,  subject,  however,  to  the  following  encumbrance: 


The  taxes  are. 
Remarks    


Respectfully  submitted, 

Attorney. 

19.... 

[403] 


CHAPTER  XXIV. 


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— 

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[404] 


0£ 


CHAPTER  XXV. 

Books  and  Blanks. 

General  Suggestions. 

The  keeping  of  the  accounts  of  the  associations  is  a 
matter  too  extensive  to  be  discussed  in  all  its  details  here. 
In  point  of  fact  there  is  not  yet  that  uniformity  in  the 
methods  of  bookkeeping  in  associations  which  we  may 
certainly  expect  to  see  introduced  in  the  near  future.  THe 
improvements  which  have  appeared  in  the  last  few  years 
are  manifold. 

A  good  illustration  of  the  labor-saving  methods  which 
are  being  introduced  is  seen  in  the  Dues,  or  Secretary's 
Book.  Formerly  postings  were  made  from  this  book 
weekly  (or  monthly)  after  each  meeting.  The  book  is 
now  usually  made  with  a  column  set  apart  for  each 
evening's  receipts  and  a  numbered  line  for  each  member's 
book.  The  book  is  arranged  in  sections  covering  each 
quarter  or  half  year,  with  necessary  rulings  for  totals. 
These  totals  are  posted  quarterly  or  semi-annually.  It  is 
easy  to  see  how  much  time  and  labor  is  saved  and  how 
much  the  liability  to  error  is  lessened  by  the  new  method. 

The  Secretary's  Cash  book  is  also  now  arranged  with 
polyform  columns  and  rulings,  so  that,  as  the  secretary 
enters,  meeting  by  meeting,  the  various  receipts  and  dis- 
bursements, each  upon  its  appropriate  line  in  its  appro- 
priate column,  it  is  virtually  posted  to  its  appropriate 
account.  He  is  thus  able  at  any  time,  without  the  trouble 
of  making  up  a  balance  sheet  or  detailed  statement,  to 
read  off  from  the  page  of  his  cash  book  the  actual 
financial  standing  of  the  association,  the  amount  of  gain 

[40n] 


CHAPTER  XXV. 

and  loss  on  each  item,  etc.,  and  at  the  end  of  the  term,  he 
simply  enters  the  entire  amount  of  each  item  on  its  ac- 
count in  the  ledger.  Formerly,  the  custom  was  to  enter 
all  such  items,  meeting  by  meeting,  in  an  ordinary  cash 
book  and  then  to  journalize  and  to  post  them  into  the 
ledger — a  very  burdensome  task,  as  secretaries  will 
testify. 

In  addition  to  the  improvements  noted  in  these  two 
books  a  large  number  of  other  books  and  various  blanks 
and  forms  have  been  devised  to  save  labor,  to  secure 
accuracy,  and  to  expedite  the  business  of  associations. 

The  work  of  an  association  in  the  taking  of  dues,  etc., 
must  be  done  quickly,  and  as  accuracy  in  all  things  is  so 
essential  to  the  success  of  the  association,  directors  and 
ofificers  should  be  careful  to  adopt  the  best  system  possible 
and  to  provide  themselves  with  the  best  and  most  con- 
venient books  and  forms.  It  is  especially  desirable  that 
the  system  adopted  should  be  so  simple  and  compre- 
hensive that  its  workings  can  be  understood  easily  even 
by  uneducated  and  inexperienced  members.  The  books 
and  forms  should  be  those  that  have  stood  the  test  of 
actual  experience  and  have  given  satisfaction.  In  order- 
ing books  care  must  be  taken  that  they  correspond  to 
each  other,  so  that  all  will  fit  in  properly  as  parts  of  one 
system. 

Book  Account. 

Some  associations  keep  a  separate  account  of  books 
and  supplies,  taking  off  a  percentage  each  period  from  this 
account.  Others  charge  these  direct  to  the  expense  ac- 
count as  they  are  purchased. 

Pass-Books. 

The  pass-book  is  the  book  furnished  to  each  member 
by  an  association,  in  which  are  recorded  the  receipts  for 

[406] 


BOOKS  AND  BLANKS. 

his  clues  as  he  pays  them  from  meeting  to  meeting.  This 
book  is  known  under  various  names,  as  "Pass-Book," 
"Member's  Book,"  "Receipt  Book,"  "Stock  Book,"  etc. 
There  is  so  much  inquiry  with  reference  to  these  books, 
and  such  frequent  difficulty  in  new  associations  in  getting 
them  in  proper  form,  that  a  full  description  is  given  here 
to  assist  persons  interested  in  organizing  associations. 

These  books  are  subjected  to  constant  usage  and  must 
last  a  long  time.  Usually,  a  period  of  from  six  to  ten 
years  must  elapse  before  the  stock  is  finally  paid  up.  Pass- 
books should  therefore  be  made  of  good  paper,  in  strong 
and  durable  binding,  of  convenient  size,  and  to  open 
easily.  For  the  convenience  of  officers  and  members,  and 
in  order  to  expedite  the  business  of  the  association,  pass- 
books should  be  carefully  and  systematically  arranged 
and  properly  adapted  for  their  purpose. 

Pass-books  are  usually  4  to  4>4  inches  in  width  and 
6  to  7  inches  in  length.  They  should  contain  the  consti- 
tution and  by-laws  of  the  association,  a  blank  certificate 
of  stock,  blanks  for  transfer  of  stock,  and  16  leaves — 32 
pages — properly  ruled  and  lettered  for  receipts  for  dues. 

The  certificate  of  stock  is  as  follows : 

Xhe Building   and    Loan   Association, 

of 

Book  No Certificate  of  stock. 

This   Certifies,   that 

is  entitled  to shares,  subscribed  in  The 

Building  and  Loan  Association,  which  are  to  be  regulated  and 
controlled  by,  and  which  may  be  transferred  according  to  tlie 
Constitution  and  By-Laws  of  said  Association.* 

Admission   Fee,  $ Book cents. 

Received    Payment, 

Secretary. 

19.... 


Some  uiocittioas   put   their   seal   on   each   certificate. 

[407] 


CHAPTER  XXV. 

The  certificate  of  stock  is  made  to  occupy  one  page  of 
the  pass-book.  On  the  back  of  this  certificate  should  be 
printed  two  or  three  blanks  for  the  transfer  of  shares,  as 
follows. 


For  value  received,  I  hereby  transfer  to 

all  my  claims,  rights,  and  interest  in 

shares  of  the  capital  stock  of 

The Building   and   Loan   Association, 

of ,  on  this  the day  of 19. . . . 


.  Secretary. 


The  leaves  for  receipts  should  be  made  of  good,  strong 
writing  paper,  interleaved  with  light  blotting  paper.  The 
paper  should  be  ruled  with  fifteen  lines  to  the  page  and 
should  have  printed  headings  and  column  rulings  as 
follows:' 


DATE 

DUES 

Interest 

Premium 

FINES 

RECEIPT 

Pass-books  are  sometimes  made  with  twenty-six  in- 
stead of  fifteen  lines  to  the  page,  but  this  plan  either 
makes  the  book  inconveniently  large  for  carrying  and 
handling,  or  causes  the  rulings  to  be  too  close  for  con- 
venience. 

[4081 


BOOKS  AND  BLANKS. 

On  the  front  cover  of  the  book  should  be  pasted  the 
number  of  the  book  and  a  printed  label  as  follows : 

365 


In    account    with 

The Building  and  Loan  Association, 

of 

No Shares 

Deposit  Envelopes  and  Sh^s. 

When  a  member  appears  to  make  his  payments  he  fills 
out  a  deposit  ticket  or  slip  and  encloses  it  with  the  exact 
amount  of  his  payment  at  the  proper  place  in  his  pass- 
book, and  hands  it  in.  Some  associations  use  the  deposit 
envelope  instead  of  the  slip,  and  this  is  much  better.  The 
envelope  is  used  exactly  as  the  slip  except  that  the  money 
is  enclosed  and  sealed  up  in  it,  thus  preventing  its  being 
accidentally  dropped  out  of  the  book  and  causing  loss, 
delay,  or  error.  The  receiving  officer  calls  off  the  number 
of  the  pass-book  and  the  amount  of  money  written  on 
the  slip  or  envelope,  and  passes  all  over  to  the  other 
members  of  the  finance  committee,  one  of  whom  counts 
the  money,  and  another  receipts  for  the  dues  in  the  pass- 
book and  returns  it  to  the  owner,  the  slip  or  envelope 
being  placed  on  file.  When  dues  are  received  in  this  man- 
ner it  is  very  easy  to  check  up  the  accounts  at  the  close 
of  the  meeting.  In  some  associations  the  money  is  simply 
enclosed  in  the  pass-book  without  any  deposit  slip  or 
envelope.  Where  there  is  a  large  membership,  owing  to 
the  numerous  payments  and  the  rush  and  incidental  con- 
fusion, errors  are  likely  to  occur,  both  in  the  money  paid 
in  and  in  the  entries.  Where  deposit  slips  or  envelopes 
are  used  it  is  easy  to  locate  errors  and  to  make  necessary 
corrections. 

IJOfll 


CHAPTER  XXV. 
Below  are  fonns  of  deposit  slips  and  deposit  envelopes 


DEPOSIT   SLIP. 


The Building  and  Loan  Association, 


Nar 


Book  No. 


.19. 


No.  of  Shares. 


For weeks. 


Dues     

$ 

cts. 

Interest 

Premium 

Fines  

Admission    ^ 

or            V 

Transfer      } 

Book 

Total         .   .  .                   

. 

[410] 


BOOKS  AND  BLANKS. 
THE BUILDING  ASSOCIATION 

of 


DEPOSIT  ENVELOPE. 


trOTF.—A'!  moneys  hand f  J  in  /■?  the  Atsociation  /itr  Credit  on  Member 
akip  Account,  must  oe  enclosed  in  one  0/  these  envelopes,  and  the  blanks 
ftro^er'.y  plied  out,  to  ptevent  mistakes  or  disputes. 

Book  No. 

MENiBER'S  NAME. 

Dubs  for..j^ ...Shares,  for...,^^, ....Weeks 

Interest  or 
Premium 

f  Loan,              i,    ^  w..k...,^ki..k 

1 
'in  Loan, k      i~-,.k».,...bi..i ! 

i 

Fines, 

Initiation  f-'e 
Pass  Book  ■ 
Transfer 

e.  (50c.  } - i 

r25c.) 5 

•    (SOc. ) $ 

Totaf  Cash  in  En  ye/ope. 

Data,. 


Capjri^ILl,  lK-16.  b7  A.  O.  Cm>Kii. 


Ill 


CHAPTER  XXV. 

Necessary  Books  and  Forms. 

The  following  books  and  forms  will  be  found  essential 

in  an  association  numbering  from  250  to  400  members: 

500  Pamphlets— Constitution  and  objects  of  the  Association. 
500  Pass-Books. 

1  Constitution  and  Signature  Book. 
5,000  Deposit  Envelopes  or  Slips. 
1  First  Secretary's  Dues  or  Receipt  Book. 
1  Second  Secretary's  Book. 
1  Treasurer's  Receipt  Book. 
1  Treasurer's  Cash  Book. 
1  Secretary's  Itemized  Cash  Book. 
1  Individual  and  General  Ledger. 
1  Appraisement  Book. 
1  Withdrawal   Book. 

1,000  Warrants  on  Treasurer— Perforated,  numbered,  and  bound. 
Blanks  for  Mortgages,  Bonds,  Notes,  etc.,  as  may  be  required. 
1  Record  Book  for  the  purpose  of  keeping  the  minutes  of  the 
meetings  of  the  association  and  of  the  Board  of  Directors. 

An  association  cannot  well  transact  business  without 
ix)ssessing  at  least  the  books  and  forms  enumerated 
above.  But,  in  addition  to  these,  most  associations  use 
various  other  books  and  forms  which  are  found  of  the 
greatest  convenience  and  value  in  the  transaction  of  their 
business.  The  books  and  forms  mentioned  above,  to- 
gether with  many  others,  will  be  found  described  in  the 
list  on  next  page. 

Building  Association  Sw^^lies. 

The  following  is  a  list,  alphabetically  arranged,  of 
books  and  forms  for  building  associations,  prepared  by 
the  American  Building  Association  News  Company, 
Cincinnati,  who  have  made  a  specialty  of  furnishing 
building  association  supplies  for  over  fifty  years. 

[412] 


BOOKS  AND  BLANKS. 

Amendments  to  the  Constitution.— VJYien  amendments  are  made 
to  constitutions  it  is  desirable  that  a  copy  of  the  amendment  be  placed 
in  each  member's  pass-book.  These  amendments  are  printed  on 
gummed  paper  so  that  a  copy  can  be  placed  in  each  pass-book. 

Application  Book  (For  Loans).— Copyright.— Has  columns  for 
date  of  application  for  loan,  name,  amount  of  money  desired,  how 
much  granted,  and  spaces  for  description  of  property,  reports  of 
committees  with  their  signatures,  and  other  important  remarks. 

Application  Book  (For  Loans),  Combined  with  Attorney's 
Reports. 

Application  Book  (For  Membership). 

Applications  for  Money  (Dividends).  Bound  in  book  form, 
numbered  and  perforated  with  stubs,  or  plain  without  stubs. 
Furnished  unbound  also. 

Applications  for  Money  (Dividends  and  IVithdratuals  Combined). 
Bound  or  loose  as  described  above. 

Applications  for  Money  (IVithdrawals). — Bound  in  book  form, 
arranged  for  withdrawals  in  full  or  in  part,  numbered  and  perforated 
with  stubs,  or  plain  without  stubs.     Furnished  unbound  also. 

Appraisement  Book. — For  recording  reports  of  appraising  com- 
mittees.    Made  in  all  sizes,  and  arranged  in  conformity  with  law. 

Balance  Sheets.— Showing  entire  business  of  an  association  for 
a  stated  time. 

Bonds  for  Officers. — 

Cash  Book  and  General  Ledger.— Copyright.— KW  entries  to  the 
general  accounts  such  as  interest,  premium,  etc.,  are  posted  when 
made,  and  at  end  of  each  quarter  or  half  year,  or,  at  any  other 
time,  a  complete  balance  can  be  read  off  from  this.  Considerable 
time  is  saved  by  using  this  book. 

Cash  Book  for  Secretaries.— ^'\\h.  special  rulings  and  heads  and 
all   necessar>'  polyforms  and   divisions. 

Cash  Book  for  Treasurer. — Made  in  convenient  pocket  form. 
Certificates   of  Paid-Up   Stock.— VJitb   ten    stubs   of   $100   each, 
perforated    and   numbered,    with    laws    pertaining    to    same   printed 
on  back. 

Check  Books  (Bank). 
Circulars. — All  styles  and   sizes. 
Collateral  Notes.— (See  form«.) 

Constitution  Record  Book  with  Members'  Numerical  Register 
and  Ledger  Index  Conthmed.—Contiuns  blank  space  for  recording 
constitution  and  amendments  thereto,  with  blanks  for  signatures  of 
members  numbered  in  regular  order,  record  of  .shares  held  by  eadi 

1413] 


CHAPTER  XXV. 

member,  place  of  residence,  pass-book  number  of  each  member,  and 
ledfier  folio  of  each  member  arrang^ed  in  alphabetical  index. 

Deposit  Blanks. — With  or  without  space  for  advertisements. 

Deposit  Envelopes. — Copyright. — Large  and  small,  perforated. 
Can  be  printed  on  both  sides,  one  side  with  blanks  for  deposits,  and 
the  other  side  for  advertising  purposes.  These  are  very  useful  and 
serve  as  a  check  pn  the  receipts. 

Deposit  Fee  Book. — For  keeping  account  of  fees  advanced  by 
members  applying  for  loans. 

Dividend  Books. — For  keeping  dividend  accounts.  The  members' 
numbers  are  printed  in  regular  order,  50  to  a  page,  with  space  for 
names  adjoining,  after  which  follow  spaces  for  amounts  of  dividends 
and  receipts  therefor. 

Dividend,  Report  Record,  and  Reserve  Fund  Book. — Copyright. 

Dividend  Tables. 

Dividend  Warrants. 

Dividend  Withdrawal  Blanks. 

Dodgers. — All  sizes,  English  and  German. 

Dues  Books. — Different  designs  of  weekly,  monthly,  quarterly 
and  semi-annual  dues  books  of  the  most  approved  patterns. 

Election  Tickets. — And  specially  ruled  Tally  Sheets. — Furnished 
to  order. 

Envelopes. — Printed  to  order. 

General  Ledger  and  Cash  Book. 

Index. — Plain  and  voweled. 

Index  {Combination) . — See  Constitution  Record  Book. 

Individual  Ledgers. — Made  to  order  in  any  desired  form.  We 
have  ledgers  arranged  for  posting  every  week,  month,  half-year, 
etc.  We  make  a  special  Ledger  for  Building  Associations  which  can 
be  used  for  quarterly  and  half-yearly  postings.  We  also  manufacture 
ledgers  with  dates  printed  in,  thus  saving  considerable  time  in  mak- 
ing entries  for  those  secretaries  who  post  receipts  at  each  meeting. 

Letter  Heads. — Printed  to  order. 

Mechanic's  Liens. —  (See  forms.) 

Memorials. — Resolutions  or  respect  for  deceased  officers,  di- 
rectors, and  members,  printed  in  neat  and  appropriate  styles. 

Mortgage  Blanks. —  (See  forms.) 

Mortgage  Clause  Blanks. — (See  form.) 

Mortgage,  Lease,  and  Insurance  Record. — Ruled  to  show  number, 
amount  of  loan,  expiration  of  lease,  location  of  property,  and  amount 
and  expiration  of  insurance,  as  well  as  cancellation. 

Nightly  Receipt  Books  and  Sheets.— (See  Dues  Book.) 

1414] 


BOOKS  AND  BLANKS. 

Notes.— Blznk,  or  bound  in  bock  form,  drawn  in  conformity 
with  law. 

Note  Heads. — Printed  to  order. 

Notices  to  Members. — Printed  to  order. 

Nu>}ibers.—ln  sets  of  1  to  500,  and  1  to  1,000  and  upward  in 
different  sizes  and  gummed. 

Order  i?oojfej.— Made  in  all  sizes,  numbered  and  perforated. 

Pads  (Memorandum).    All  sizes. 

Paid-up  Stock  Certificates.— (Stc  Certificates  of  Paid-Up  Stock.) 

Paid-Up  Stock  Certificate  Ledger  and  Dividend  Books. 

Pamphlets,  in  English  and  foreign  languages.— Vr'mied  to  order. 

Pass-Bcoks. 

Posters.— AW  sizes  to  order,  for  advertising  sales  of  property,  etc. 

Proxy  Blanks.— For  elections.    (See  form.) 

Receipts. — Plain  blanks,  or  bound  in  book  form. 

Record  Books.— In  different  styles  with  or  without  index.  Also 
printed  records  to  order. 

Reports. — Semi-annual,  annual,  etc.,  printed  in  any  form. 

Share  Account  Books. 

Seals. 

Secretary  Books.— For  the  First  and  Second  Secretaries.  The 
best  designs  in  this  line.  Special  attention  is  called  to  the  new  13 
and  26-\veek  books,  m  ule  en  the  most  labor-saving  plan.  Second 
Secretary  books  in  different  styles. 

Show  Cards.— Signs  for  place  of  meeting. 

Solicitor's  Reports. 

Subscription  Blanks. — For  new  associations. 

Subscription  Books. — Stock. 

Tally  Books  and  Blanks— GencTuWy  used  by  the  Second  Secretary 
or  Finance  Committee. 

Tally  Sheets. — For  elections. 

Transfer  Book. — Stock. 

Treasurer's  Cash  Books.— MsL<ie  especially  for  treasurers  in  con- 
venient pocket  form. 

Treasurer's  Receipt  Books —Regu^zr.  Also  extra  ruled  and 
printed,  with  13  weeks  (three  months),  receipts  to  a  page,  and  space 
for  date,  signature,  amount,  and  account  for  overs  and  shortages 
in  cash  received. 

yVithdrawal  Blanks. — In  pads  or  book  form. 


141.11 


CHAPTER  XXVI. 

Juvenile  Savings* 

Owing  to  the  prominence  given  to  the  movement  in 
Ehnira,  N.  Y.,  by  Mr.  McEvvan,  of  the  Nezv  York  Eve- 
ning Post,  several  years  ago,  inquiries  have  come  from 
such  divergent  points  as  Los  Angeles,  Seattle,  Birming- 
ham, Ala.,  and  Fitchburg,  Mass.,  clearly  showing  that 
interest  in  this  subject  is  not  local. 

For  the  benefit  of  others  interested  we  will  attempt  to 
outline  the  operation  of  a  juvenile  department  as  an  ad- 
junct of  a  savings  and  loan  association. 

The  scheme  is  not  new.  Toward  the  close  of  the  last 
century  Prof.  Elias  J.  Beardsley,  principal  of  one  of  the 
Elmira  schools,  ojierated  a  savings  department  success- 
fully, until  it  was  brought  to  the  attention  of  the  Board 
of  Education  with  a  view  to  its  extension  throughout  all 
the  city  schools,  when  it  was  found  that  it  contravened 
the  state  savings  bank  law. 

The  school  savings  system  was  not  extended  then, 
neither  was  any  effort  made  to  secure  legislation  in  aid 
of  this  commendable  addition  to  the  school  curriculum; 
and  Prof.  Beardsley  was  even  compelled  to  discontinue 
its  operation  in  his  own  school. 

The  seed  thus  sown  did  not,  however,  fall  wholly  on 
barren  soil,  for,  although  many  years  elapsed  since  the 
failure  of  his  plan,  the  subject  recurred  from  time  to  time, 
and  at  a  meeting  of  the  directors  of  an  Elmira  associa- 
tion it  was  discussed  in  the  presence  of  fCIay  W.  Holmes, 
a  loan  association  enthusiast  of   wide  experience,   who 


Prepared  by  Mr.  H.  M.  Clark,     t  Deceased. 

[416] 


JUVENILE  SAVINGS. 

recognized,  at  once,  the  beneficial  features  of  a  system 
(lesigTied  to  stimulate  thrift  and  the  savings  habit  in 
children.  He  drafted  a  bill,  which  ultimately  became  a 
law,  permitting  New  York  savings  and  loan  associations 
to  operate  children's  savings  departments.  In  the  framing 
of  the  law  he  had  recourse  to  the  knowledge,  ripe  experi- 
ence and  wise  counsel  of  \\'illiam  Fleming,  then  Secre- 
tary of  the  East  Rutherford  ( N.  J. )  association,  the  first 
in  America,  we  believe,  to  carry  this  plan  to  complete 
success. 

The  Corning  (X.  Y.)  association  was  the  first  to  in- 
augurate a  juvenile  department  under  the  new  law.  The 
earnestness  of  fFrank  D.  Kingsbury,  one  time  President 
of  the  United  States  League  of  Building  and  Loan  Asso- 
ciations, and  the  cheerful  co-operation  of  his  associates 
assured  a  success  beyond  anticipation. 

Corning  is  a  city  of  17,000  inhabitants,  with  no  other 
savings  institution  than  the  Co-operative.  Accordingly, 
a  clear  field  was  presented  for  trying  out  the  experiment. 
Its  success  was  immediate ;  the  receipts  for  the  first  six 
months  exceeded  $5,000,  from  a  membership  of  500  it 
increased  in  five  years  to  877,  with  deposits  of  $33,000. 
A  stranger  in  Corning  on  children's  day  might  imagine 
the  Pied  Piper  of  Hamlin  was  here  plying  his  craft  and 
inveigling  all  the  young  folks  of  the  city  through  the 
doors  of  the  association.  Coming  pell-mell,  they  swarm 
up  the  steps  of  the  office,  each  child  carrying  a  small 
steel  bank  to  be  opened  and  its  contents  counted  and 
entered  in  a  pass-book.  A  Corning  kid  without  a  bank  is 
an  anomaly.  About  the  first  act  upon  the  birth  of  a  child 
is  to  provide  it  with  a  bank,  pass-book,  and  certificate  of 
mcmbcrshii)  in  the  children's  department.  We  do  not 
believe  the  statement  is  overdrawn;  for  frequently  the 

t  Deceased. 

[4171 


CHAPTER  XXVI. 

writer  has  received  the  reply,  "One  day  old,"  in  answer 
to  the  usual  question  as  to  the  age  of  the  new  member. 

However,  the  fact  remains  that  nowhere  in  the  world 
is  there  a  more  thriving^  institution  of  its  kind  than  the 
ju\cnile  department  of  the  Corning  association.  The 
motives  which  lead  to  the  establishing  and  operation  of 
a  children's  saving  department  in  a  community  are  not 
sordid  in  the  slightest  degree;  they  arise  from  pure  altru- 
ism, requiring  a  deal  of  unremunerated  labor  and  the 
exercise  of  a  large  amount  of  patience. 

Each  child  on  joining  is  provided  with  a  small  steel 
bank,  depositing  one  dollar  as  security  for  its  safe  re- 
turn (the  association  retaining  the  master-key),  also  a 
pass-book,  with  number  corresponding  to  that  of  the 
bank,  wherein  is  entered,  from 'time  to  time,  the  amount 
of  the  deposits  and  withdrawals. 

A  day  is  set  apart  each  month  as  children's  day;  care 
being  taken  to  choose  a  day  whereon  nothing  else  of  im- 
portance is  liable  to  occur. 

Four  or  five  receiving  tellers,  volunteering  their  serv- 
ices, are  on  hand,  whose  business  it  is  to  open  the  banks 
presented,  count  the  cash,  make  a  minute  of  the  amount 
on  a  check-slip  and  on  a  colored  slip  on  which  is  written 
the  number  of  the  bank  and  pass-book. 

The  colored  slip  is  given  to  the  child,  who  hands  it 
with  its  pass-book  to  the  President,  or  his  proxy,  who 
selects  the  card  having  the  child's  name  and  number 
of  his  bank  (this  card  being  the  ledger  account  with  that 
child,  and  a  duplicate  of  the  entries  in  the  pass-book). 
The  card,  slip  and  pass-book  are  passed  on  to  the  secre- 
tary who  enters  the  amount  on  a  numbered  sheet,  the  slip 
is  spindled  and  the  deposit  entered  in  the  pass-book,  which 
is  then  returned  to  the  child.  Each  cashier  issues  a  dis- 
tinctively colored  slip,  so  that  an  error  may  be  readily 
located  when  the  cash  is  balanced  after  banking  hours. 

[418] 


JUVENILE  SAVINGS. 

The  receipts  of  the  Corning  juvenile  department  average 
$750  on  children's  day. 

A  year  later  juvenile  branches  were  established  in  the 
two  Elmira  associations.  Here  they  were  brought  in 
competition  with  a  Penny  Provident,  a  savings  bank, 
and  two  other  institutions  catering  to  children's  accounts. 
Accordingly,  while  they  have  had  a  measure  of  success 
and  a  steady  growth  from  the  beginning,  they  have  fallen 
short  of  the  phenomenal  success  of  Corning  and  East 
Rutherford. 

Added  impetus  has  been  given  to  the  movement  in 
Elmira  by  the  introduction  of  the  system  in  the  public 
schools. 

The  success  of  such  extension  of  the  juvenile  depart- 
ment is  perhaps  best  gathered  from  the  following  por- 
tion of  the  address  to  the  shareholders  of  the  Chemung 
Valley  Mutual  Loan  Association  by  its  President,  Clay 
W.  Holmes*  : 

"In  1905  your  President,  then  Chairman  of  the  Legislative  Com- 
mittee of  the  New  York  State  League  of  Savings  and  Loan  Asso- 
ciations, prepared  an  amendment  to  the  Savings  and  Loan  Law, 
known  as  the  Juvenile  Savings  Act,  and  secured  its  passage  by  the 
Legislature.  This  act  provided  that  the  minor  could  transact  busi- 
ness with  the  Savings  and  Loan  Association  without  the  interfer- 
ence of  a  guardian  or  parent.  The  purpose  of  this  act  was  to  relieve 
the  Association  from  the  annoying  and  uncertain  conditions  of  exist- 
ing laws,  and  enabling  a  minor  to  deposit  his  savings  without  let  or 
hindrance  and  withdraw  them  at  pleasure  on  the  same  independent 
basis  as  grown  people.  This  act  has  been  of  great  advantage  in 
many  ways.  For  a  long  time  the  author  of  this  act  had  studied  its 
application  to  the  educational  benefit  of  children,  and  when  he  found 
that  the  present  able  Superintendent  of  Scliools,  Mr.  D.  C.  Bliss, 
was  an  earnest  student  along  the  same  lines  a  plan  was  devised  for 
its  trial  in  the  public  schools.  The  matter  was  submitted  to  the 
Board  of  Education  and  heartily  approved.  An  explanatory  circular 
was  prepared  and  submitted  to  the  parents  on  Friday,  November  4, 
1910,  and  on  the  following  Monday  the  teachers  in  the  ten  grammar 
schools  of  Elmira  received  from  such  pupils  as  desired  to  join  the 

•  Deceased. 

[4191 


CHAPTER  XXVI. 

Juvenile  Department  their  deposit  envelopes.  It  was  hardly  ex- 
pected that  many  of  the  cliildren  would  be  sufficiently  interested  on 
the  first  day  to  start  an  account.  Much  was  our  surprise,  therefore, 
to  receive  1,142  envelopes,  which  meant  that  one-third  of  all  the 
pupils  responded  on  the  first  call.  Every  Monday  since,  regular  as 
a  clock,  the  children  have  produced  their  little  envelopes,  and  at  this 
time  over  1,700  are  enrolled,  the  exact  number  being  1,730  at  the 
close  of  the  year.  Over  100  have  joined  in  January.  Believing  that 
it  will  be  of  interest  to  the  parents,  as  well  as  the  general  public, 
some  statistics  are  here  given  to  show  how  the  plan  is  working. 
Up  to  the  Christmas  vacation  there  were  seven  Monday  deposits, 
and  the  total  deposits  of  those  days  numbered  6,797,  of  which  num- 
ber 4.fHM  did  not  exceed  "25  cents,  made  up  as  follows:  One  hun- 
dred and  eighteen  of  1  cent  each,  61  of  2  cents,  55  of  3  cents,  37  of 
4  cents,  1,011  of  5  cents,  1,581  between  5  and  10  cents,  2,102  between 
10  and  25  cents,  leaving  a  balance  of  1,832  deposits  which  exceeded 
25  cents  each.  These  figures  clearly  prove  that  the  plan  is  a  great 
success  educationally,  and  that  the  belief  of  the  promoters  was  cor- 
rect. But  let  us  go  still  further  and  note  the  total  of  the  seven 
weeks  and  see  what  the  aggregate  amounts  are.  There  were  380 
having  less  than  25  cents,  280  between  25  and  50,  207  between  50  and 
75,  and  162  between  75  and  $1.00,  a  total  of  1,029  having  less  than 
$1.00,  leaving  501  who  exceeded  $1.00.  Now,  as  a  financial  proposi- 
tion one  could  hardly  call  such  figures  promising  for  profit  to  any 
institutions,  in  fact,  it  costs  more  for  the  clerical  help  to  handle  the 
large  number  of  accounts  than  the  money  received  will  earn  in  in- 
terest for  the  Association,  but  when  one  stops  to  consider  that  "as 
the  twig  is  bent  the  tree  inclines,"  there  is  much  in  it.  Some  day 
these  children  will  be  grown  up,  and  when  they  come  to  graduation 
they  have  not  only  learned  how  to  read  and  do  cube  root,  but  also 
the  greater  lesson  of  self-denial  and  saving  which  will  lead  them  to 
continue  their  saving  habit.  Another  interesting  proof  of  the  possi- 
bility of  such  education  is  that  the  children  of  very  tender  age  seem 
to  take  hold  of  the  plan  more  freely  than  older  pupils,  as  is  shown 
in  these  figures.  The  ages  of  the  present  members  is  as  follows : 
One  hundred  five,  five  years;  202,  six  years;  216  seven  years;  211, 
eight  years;  194,  nine  years;  187,  ten  years;  148,  eleven  years;  162 
twelve  years;  121,  thirteen  years;  95,  fourteen  years;  38,  fifteen 
years;  10,  sixteen  years;  and  2,  seventeen  years.  The  list  includes 
760  boys  and  770  girls.  There  are  many  other  interesting  features 
connected  with  this  work,  but  these  facts  are  given  just  to  illustrate 
what  can  be  done  when  children  take  hold. 

[420] 


JUVENILE  SAVINGS. 

Your  President  regards  this  as  one  of  the  greatest  successes  ever 
achieved  in  the  Savings  and  Loan  Association  work,  and  believes 
that  it  is  but  the  beginning  of  a  great  and  universal  movement  along 
the  line  of  savings  educational  work  throughout  the  country.  The 
trouble  heretofore  has  been  to  find  a  plan  which  would  work.  The 
Elmira  plan  works  magnificently  and  beyond  the  wildest  hopes  of 
its  promoters,  and  the  Chemung  Valley  has  turned  the  trick  for  the 
benefit  of  the  world  at  large.  Educate  the  child,  and  the  man  will 
save  without  asking.  Save  the  permies  and  the  dollars  will  take  care 
of  themselves. 

The  plan  followed  in  the  school  savings  plan  is  as  fol- 
lows :  On  Monday  morning  of  each  week  the  pupil  de- 
posits with  his  teacher  such  sum  as  he  desires.  The  money 
is  put  in  an  envelope,  which  is  sealed,  and  the  depositor's 
name,  number,  room  and  amount  of  deposit  written 
thereon,  either  by  the  teacher  or  by  the  depositor,  if  com- 
petent. 

The  envelopes  are  collected  from  the  several  rooms  and 
delivered  to  the  principal,  whose  duty  it  is  to  see  that  they 
reach  the  association  which  receives  the  deposits  in  the 
name  of  the  pupil,  who  thereby  becomes  a  full-fledged 
member  of  the  juvenile  department.  The  amount  con- 
tained in  each  envelope  is  credited  in  a  pass-book.  Inter- 
est is  allowed  on  all  sums  of  one  dollar  at  the  rate  of 
4  per  cent  per  annum.  Dividends  are  credited  in  January 
and  July,  and  entered  in  the  pass-book  in  red  ink,  to 
catch  the  attention. 

The  pass-book  is  retained  by  the  teacher,  although  a 
pupil  may  take  it  home  to  exhibit  to  his  parents  at  any 
time  they  wish  to  see  it;  but  the  book  is  returned  forth- 
with to  the  teacher  for  safe-keeping. 

Should  a  pupil  wish  to  withdraw  any  of  the  savings, 
he  may  apply  in  person  at  the  office  of  the  association 
with  the  pass-book  and  receive  his  money.  Such  with- 
drawals must  be  in  the  sums  of  one  dollar  i)r  multiples 

[421] 

S8 


CHAPTER  XXVI. 

thereof.  When  a  ])upil  graduates  or  leaves  school  he  may 
still  continue  his  deposits  at  the  office  of  the  association, 
on  the  same  account,  at  his  option. 

If  these  juvenile  savings  were  derived  merely  from 
money  given  to  the  child  by  doting  parents  and  admiring 
relatives  the  scheme  would  still  be  lacking  an  essential 
educational  element.  Our  observations  have  brought  to 
light  the  fact  that  children,  spurred  on  by  an  ambition  to 
save,  are  induced  to  earn  the  money  themselves.  In  win- 
ter they  run  errands,  clean  sidewalks,  care  for  furnaces, 
and  do  such  odd  jobs  as  always  await  an  active,  wide- 
awake boy.  A  prolific  source  of  juvenile  earnings  is  sel- 
ling newspapers  and  magazines.  In  summer  there  are 
lawns  to  mow,  gardens  to  weed.  Some  keep  chickens 
and  sell  eggs.  Two  young  girls,  who  live  on  a  farm,  pick 
berries  and  other  fruits,  being  paid  for  their  work. 

There  is  an  orphans'  home  in  Elmira,  whose  boys  and 
girls  are  each  allotted  a  garden  plot  and  permitted  to 
have  and  use  as  they  wish  the  proceeds  of  all  they 
raise.  Fifteen  or  more  of  these  embryo  agriculturists 
have  their  banks  and  bank  accounts  in  a  juvenile  depart- 
ment. 

There  is  a  feature  apart  from  the  mere  depositing 
and  saving  which  furnishes  a  concrete  illustration  of  the 
educational  aspect  of  the  system;  i.  e.,  the  withdrawals. 
It  would  indeed  be  a  shallow  pretense  if  the  child  were 
taught  to  save  and  nothing  more  in  that  connection.  To 
inculcate  the  purpose  of  savings  and  the  wise  users  to 
which  they  may  be  put  is  not  the  least  beneficial.  Many 
withdraw  the  money  which  they  have  saved  to  buy  cloth- 
ing; others,  school  books;  one  recently  withdrew  to  pay 
his  doctor's  bill ;  another  to  purchase  the  materials  for  a 
"raw  dog."  I  was  sorry  for  one  lad.  He  had  a  fine 
paper  route  and  had  saved  $40.  His  lip  quivered  as  he 
replied  to  the  inquiry  usual  in  such  cases:     "Father  has 

[422] 


JUVENILE  SAVINGS. 

a  note  to  meet."  It  is  to  be  regretted  that  he  became  dis- 
couraged, turned  in  his  bank-book  and  is  not  saving  now. 
Two  girls  made  their  first  payment  on  a  new  piano  from 
their  joint  savings.  A  Httle  miss  presented  her  pass-book, 
saying,  "I  want  to  draw  out  my  money  because  mamma 
has  to  make  a  payment  on  the  house." 

It  has  developed  in  certain  instances  that  the  bank, 
ostensibly  in  the  name  of  the  child,  is  actually  used  as 
the  family  depository,  and  the  account  drawn  upon,  from 
time  to  time,  in  cases  of  domestic  emergency. 

Savings  Boxes  or  Home  Safes. 

In  many  communities  it  has  been  found  desirable,  in 
order  to  bring  to  each  home  an  opportunity  to  save,  to 
install  a  Home  Safe  without  charges.  This  gives  the 
entire  family  an  opportunity  to  save  some  money  and 
establish  the  habit  of  economy.  These  savings  are  de- 
posited at  the  office  of  the  association  and  credited  in 
special  deposit  books. 

The  Halifax  Permanent  Benefit  Building  Society  of 
England  in  19 19  in  this  connection  reported  as  follows: 

"The  small  steel  Home  Safes  lent  by  the  Society  to 
investors,  continue  to  be  in  favor,  and  they  are  widely 
used.  The  amount  received  in  the  Small  Savings  Depart- 
ment during  the  year  was  £168,633  ^^-  ^^^  iid.,  an  in- 
crease of  £62,330  i8s.  and  4d." 


[•1231 


CHAPTER  XXVII. 

Advertising. 

If  building  and  savings  associations  have  a  great 
moral  obligation — outside  of  the  honest  and  efficient 
administration  of  the  funds  entrusted  to  them — then  it  is 
the  promulgation  of  one  maxim:     "Save  money!" 

This   sounds  like  a   somewhat   homely,   commonplace 
proposition.    But  observe  how  very  cleverly  and  pointedly 
the  great  Scotchman,  Burns,  expresses  the  same  idea: 
Save   Money  ! 
Not  for  to  hide  it  in  a  hedge, 
Not  for  a  train  attendant, 
But  for  the  glorious  privilege 
Of  being  independent. 

To  be  independent :  That  is  the  great  wish,  the  all- 
absorbing  longing  of  every  person.  "Economic  depend- 
ence is  the  basis  of  all  slavery — social,  political  or  other- 
wise !"  So  says  a  great  philosopher,  and  the  truth  of  this 
axiom  cannot  be  denied.  World  movements  are  being 
built  upon  the  foundation  of  this  truth,  with  the  aim 
of  delivering  mankind  from  the  bane  of  economic 
dependence. 

And  yet  the  fact  remains,  the  individual,  depending 
upon  his  own  resources,  has  but  one  recourse  to  escape, 
to  some  extent,  this  curse  of  economic  dependence,  and 
that  is  to  "Save  money!" 

Looking  at  this  from  the  viewpoint  of  advertising, 
it  becomes  at  once  clear,  what  a  strong  advertising  appeal 
every  building  and  savings  association  has  to  every 
member  of  its  particular  community. 

[424] 


ADVERTISING. 

Large  as  the  activities,  the  influences,  the  good  work 
of  the  building  and  savings  associations  at  the  present 
time  may  appear  in  comparison  with  their  field  of 
endeavor,  they  have  only  just  begun  to  scratch  the  sur- 
face of  this  field. 

From  this  fact  their  normal  obligation,  to  advertise,  is 
born.  Everything,  new  and  good  or  better,  must  be 
made  known  to  the  world.  There  is  no  good  in  unknown 
good. 

A  handbook  on  the  workings,  the  promotion  and  the 
betterment  of  building,  loan  and  savings  associations 
is  therefore  hardly  complete  without  a  chapter  on  adver- 
tising. 

Building,  loan  and  savings  associations,  as  organized 
in  the  United  States,  are  the  most  effective,  the  safest, 
and  the  most  remunerative  savings  institutions  of  the 
world.  They  are  recognized  as  such  by  the  people  and  by 
the  state.  Advertising  them  as  such — in  all  possible 
forms  of  advertising — is  necessary,  not  only  as  a  moral 
obligation,  or  as  a  business  proposition,  but  also  as  a 
matter  of  self-preservation. 

No  matter  how  great,  or  how  beneficial,  or  how  strong 
any  institution  as  such  may  be,  it  ever  depends  upon 
progress  for  its  existence.  To  stand  still  means  retrogres- 
sion everywhere.  Building  associations  now  existing 
mtist  extend  their  membership  and  their  usefulness;  new 
associations  must  spring  up  everywhere  and  demon- 
strate the  good  of  the  cause.  So  it  is  willed  by  the 
inexorable  law  of  the  survival  of  the  fittest. 

Therefore:     Let  us  advertise! 

The  limitations  of  this  book  make  it  impossible  to  enter 
into  a  detailed  dissertation  on  the  "science"  of  adver- 
tising. And,  moreover,  such  a  dissertation  is  super- 
fluous, and  would  fail  to  achieve  results.  It  is  quite 
impossible  to  establish  fast  and  rigid  rules  for  success- 

[l2.-i| 


CHAPTER  XXVII. 

fill  advertising,  but  there  are  a  number  of  hints,  based 
upon  solid  thought  and  experience,  which  will  well  serve 
to  pave  the  way  for  any  beginner  in  this  subtle  art. 

Why  Should  You  Advertise? 

Because — There  is  not  a  person,  may  his  income  be 
ever  so  modest,  barely  reaching  the  necessities  of  life, 
but  who  ought  to  save  money.  And  again,  there  is  no 
person  in  this  world  but  who  is  affected  by  advertising. 

Because — Advertising  impresses  your  name,  your 
object,  your  merit,  your  meeting  place  and  date  of  meet- 
ing upon  many  prospective  members. 

Because — It  increases  your  membership  and  the  good 
you  are  doing. 

Because — Increased  membership  and  increased  num- 
bers of  shares  mean  lower  cost  of  administration  per 
share,  thus  increasing  your  net  profits. 

Because — The  purpose  of  advertising  is  to  influence 
the  mind,  trying  to  teach  people  to  believe  in  you 
and  in  the  institution  you  represent.  The  whole 
business  world  rests  upon  a  foundation  of  confidence. 
It  is  impossible  to  do  business  successfully  when  con- 
fidence either  cannot  or  is  not  established,  or  has  been 
abused  and  is  gone.  Lack  of  confidence  in  any  worthy 
business,  not  only  building,  loan  and  savings  associations, 
is  generally  due  to  ignorance  and  the  fact  that  the  con- 
fidence-lacking business  is  not  well  known.  Publicity  is 
the  greatest  foe  to  ignorance.  Advertising  gives  the 
people  at  large  knowledge  about  you,  the  merits  of  your 
institution  and  your  business.  It  is  the  greatest  force  in 
the  interest  of  confidence.  It  follows  that  advertising,  to 
be  advertising  at  all,  must  be  educational. 

[426] 


ADVERTISING. 

How  Should  You  Advertise? 

Advertising  is  asking  that  many  people  do  specific 
things. 

Look  your  fellow-man  straight  in  the  eyes  and  tell  him 
that  in  your  association  you  have  something  that  he,  too, 
ought  to  have,  and  ask  him  to  come  and  get  it — that  is 
advertising. 

Anything  that  is  worth  advertising  at  all  is  worth 
advertising  well.  Any  proposition  which  is  to  appeal 
to  thousands  of  prospective  members  deserves  mature 
thought  and  utmost  care  in  preparation. 

With  regard  to  advertising  mediums,  it  may  be  said, 
that  in  the  case  of  building  associations  the  daily  and 
weekly  newspapers  deserve  the  first  consideration. 
Advertising  by  circulars,  booklets  and  other  mail  matter 
bears  the  character  of  an  individual  appeal  and  must  be 
supplementary  to  the  newspaper  advertising.  Advertis- 
ing by  posters,  hangers  and  street  car  signs  is  very 
beneficial  and  in  some  localities  may  be  indispensable. 
But  whatever  medium  or  mediums  are  selected  all  adver- 
tising should  be  carefully  planned  in  advance  and  judici- 
ously followed  up.* 

The  Preparation  of  Advertisements. 

Persons  charged  with  the  preparation  of  advertise- 
ments should  always  keep  before  their  minds  these  facts: 
Certain  forms  have  identical  effects  upon  the  majority  of 
people.  Certain  color  combinations  may  always  be  relied 
upon  to  attract  the  eye  and  the  mind,  while  other  com- 
binations never  fail  to  repel.     In  the  same  manner  certain 

•  We  would  recommend  to  association!!  the  regular  and  systematic  employ- 
ment of  such  expert  service  for  the  use  of  building  association  advertising  as 
can  be  obtained.  We  believe  employment  of  a  regular  service  is  essential,  and 
in  this  connection  would  respectfully  call  the  readers'  attention  to  the  advertising 
service  rendered  in  connection  with  the  Amkrican  Building  Association  News. 

f«27] 


CHAPTER  XXVII. 

words  and  formations  of  words  into  sentences  are  pleas- 
ing, certain  others  displeasing,  not  only  to  individuals, 
but  to  the  majority  of  individuals. 

The  first  rule  of  the  writer  of  advertisements  therefore 
must  be  to  avoid  all  that  is  repelling  and  displeasing  in 
the  wording  and  the  make-up  of  his  advertisement. 
Advertisements  must  be  attractive  and  agreeable  to  fulfill 
their  mission.  On  the  other  hand,  it  is  also  wise  to  avoid 
any  attempt  to  be  humorous.  A  humorous  advertisement 
is  at  best  a  "comical"  one,  and  is  certain  to  fall  short  in 
its  effect.  If  you  want  to  induce  a  man  to  do  business 
with  you,  you  must  interest  him,  not  amuse  him.  Busi- 
ness is  not  a  matter  of  jest  or  levity.  It  is  a  matter  of 
sense,  system  and  seriousness,  and  it  will  never  pay  you 
to  view  it  from  a  different  standpoint. 

Advertisements  reflect  the  dignity  and  the  strength  of 
character  of  the  advertiser.  This  is  true  of  the  advertise- 
ments of  any  business,  but  applies  with  increased  force 
to  the  advertising  of  financial  institutions.  The  public 
expects  dignity  of  an  institution  that  solicits  the  custody 
of  funds.  Therefore  be  honest  and  convincing  in  your 
advertising.  It  is  easy  to  employ  superlatives,  high- 
sounding  phrases  and  large  assertions,  but  it  is  not  good 
advertising.  It  is  much  better  to  state  facts  in  plain  and 
vigorous  language,  and  to  be  terse  in  style.  Set  forth  in 
a  clear,  straightforward  way  whatever  advantages  you 
may  enjoy  and  can  offer  to  others,  but  take  care  not  to 
make  promises  which  later  on  may  embarrass  you  if 
called  upon  to  make  good. 

Ncii'spapcr  advertising,  to  be  effective,  must  be  per- 
sistent. An  occasional  notice  has  little,  if  any,  value.  It 
may  take  a  campaign  of  several  years  to  produce  con- 
fidence in  the  public  mind  that  your  association  is  reliable 
and  does  what  it  promises.     It  has  been  truthfully  said, 

[428] 


ADVERTISING. 

however,  "keeping  everlastingly  at  it  brings  success." 
Persistence  is  a  jewel  of  rare  value  in  any  undertaking, 
and  particularly  so  in  the  advertising  field. 

Our  advertisements  should  incite  thrift,  urge  economy, 
and  appeal  to  the  home  instinct.  Such  objective  ends  will 
tend  to  inspire  confidence  in  the  institution  itself  on  the 
part  of  the  general  public.  Of  all  occupations  there  is 
none  nobler  than  ours.  "The  American  home"  is  in 
truth  "the  safeguard  of  American  liberties,"  and  worthy 
of  all  respect  and  honor  should  those  be  who  are  assisting 
in  this  great  work,  of  establishing  American  homes, 
wherein  peace,  righteousness  and  happiness  dwell  and 
wherein  the  children  are  taught  those  principles  which 
will  perpetuate  justice  and  liberty. 

Advertising's  greatest  value  is  accumulative.  Sporadic 
or  spasmodic  efforts  have  little  value  and  really  constitute 
a  waste  of  money.  Advertisements  should  always  be  up 
to  the  minute.  That  gives  them  life,  interest  and  influence. 

Advertisements  in  neivspapers  should  be  changed 
frequently,  at  least  as  often  as  once  each  week,  and  they 
should  always  state  in  substance  your  business  and  give 
your  business  address.  They  should  be  carefully  written, 
great  care  being  exercised  as  to  the  language  used.  They 
really  should  be  written  when  one  is  in  a  good  frame  of 
mind.  One  in  poor  spirits,  dejected  or  angry,  is  not  the 
person  to  write  advertisements  which  purpose  is  to  buy 
and  .sell  money.  lie  cannot  but  imparl  his  feelings  to  his 
composition,  and  this  might  not  be  the  most  beneficiqil 
to  the  association. 

When  well  and  feeling  good  write  a  number  of  notices 
and  then  use  them  as  occasion  demands.  You  will  find 
this  suggestion  very  helpful.  Besides,  the  more  notices 
you  write,  the  better  they  will  become,  an<l  the  more  you 
will  have  to  select  from.  The  writer  has  copy  ready  for 
at  least  five  years  to  come,  and  as  new  ideas  ct)me  to  him, 


CHAPTRR   XXV 11. 

in  thinking;'  iwcr  (.he  business,  or  when  reading  the  Amer- 
ican Ihiildiiii!;  Associalinn  IVcivs,  a  splendid  paper,  they 
are  jiUtcd  down  and  in  time  duly  developed. 

Technical  Data. 

It  is  impossible  to  establish  rigid  rules  for  advertising. 
Many  roads  lead  to  Rome.  Close  appliance,  study  and 
observation,  together  with  practical  experience,  are  the 
best  teachers.  But  there  are  a  great  many  technical  data, 
which  are  of  great  value  to  every  advertiser.  In  the  fol- 
lowing we  endeavor  to  make  this  information  accessible: 


TECHNICAL  DATA  ABOUT  ADVERTISING. 
Printing, 

The  basis  of  measurement  of  advertising  space  in  newspapers 
and  periodicals  is  ttic  agate  line.  The  word  "agate"  refers  to  the 
title  of  the  smallest  type  generally  used  by  newspapers. 

Eight  agate  lines  constitute  one  newspaper  square ;  14  agate  lines 
equal  one  inch. 

(It  ought  to  be  observed,  that  newspaper  agate  differs  from  the 
general  printers'  agate,  in  so  far,  that  newspaper  agate  is  cast  upon 
bV:  points,  while  regfular  agnate  is  cast  upon  5^2  points.  See  explana- 
tion of  point  system.) 

Some  newspapers,  especially  the  foreign,  use  the  nonpareil  (6 
points)   measurement;   12  lines  nonpareil  equal  one  inch. 

The  ordinary  width  of  a  newspaper  column  is  13  picas,  or  2j/^ 
inches.  The  column  width  of  standard  magazines  is  16  picas,  or 
254  inches. 

THE  PRINTERS'  POINT  SYSTEM. 

The  typefounders'  unit  of  type  measurement  is  the  point.  One 
point  is  .0139  of  one  inch.  The  printers'  unit  of  measurement  is  the 
pica.     One  pica  equals  12  points  and  6  picas  equal  1  inch. 


1  point  =  12  to  pica. 

2  poiiit  =  6  to  pica, 

3  point=:4  to  pica. 
S'/i  point=rBrilliant. 

4  point  — 3  to  pica. 
i'/i  point:=Diamond. 

5  point  — Pearl. 
5'/i  point = Agate. 


6  point  =  Nonpareil. 

7  points  Minion. 

8  point=^Brevier. 

9  point  =  Bourgeois. 

10  point  =  Long  primer. 

11  point  =  Small  pica. 

12  point  =  Pica. 

14  point  =  English. 

1430] 


18  point  =  Great  primer. 
24  point^^Double  pica. 
30  point  =  5  line  nonpareil. 
30  point  =  3  line  pica. 
42  pointr=:7  line  nonpareil. 
48  point=:4  line  pica. 
60  point=:5  line  pica. 
72  point  — 6  line  pica. 


ADVERTISING. 

Pa-^ers. 

The  selection  of  paper  for  advertising  matter  of  any  kind,  be  it 
stationery,  circulars,  booklets  or  catalogs,  is  of  fundamental  im- 
portance, as  the  same  contribute  a  large  share  to  the  impression 
made  by  any  printed  matter. 

In  general  the  determining  factors  are  (1)  illustration,  (2) 
subject-matter,   (3)   impression  desired. 

In  our  limited  space  it  is  impossible  to  give  a  detailed  description 
of  the  various  sizes,  styles  and  qualities  of  paper  manufactured. 

Paper  is  quoted  by  the  "Ream."  The  modern  ream  contains  20 
quires  of  25  sheets  each  or  500  sheets  altogether. 

News   Paper. 

News  Pafer  is  the  most  ordinary  of  papers  and  is  made  entirely 
of  wood  pulp.  It  comes  only  in  one  color — White.  If  tinted,  it  is 
called  Poster  paper  and  comes  in  various  colors.  The  stock  sizes  of 
newspaper  are  22x30,  22x32,  22x35,  24x35,  24x36,  25x38, 
26x38,  26x40,  28x42.  29x43.  29x44,  30x44,  32x44,  35x44, 
35  x  48,  36  X  48.  The  weight  varies  from  26  pounds  to  65  pounds  per 
ream.    The  basis  generally  is  24  x  36 — 32  pounds  per  ream. 

Outside  of  the  printing  of  neNvspapers,  this  grade  of  paper  is  used 
for  dodgers,  hand  bills,  placards,  etc.,  which  are  to  be  printed  in  very 
large  quantities  and  distributed  promiscuously. 

Book   Paper. 

Book  Paper  comes  in  diflferent  qualities,  finishes  and  tints.  It 
varies  from  plain  machine  finished  (M.  F.),  sized  and  calendared 
(S.  &  C),  sized  and  supcrcalcndarcd  (S.  &  S.  C.)  for  text  and 
engravings,  which  print  readily,  to  the  most  highly  finished  stock, 
and  all  kinds  of  antique  and  special  finishes,  for  any  sort  of  art 
printing. 

Coated  Paper,  Enameled  Paper,  Plate  Paper,  are  subdivisions  of 
book  paper.  These  papers  all  have  a  fini.sh,  which  adapts  them  to 
fine  half-tone  printing,  color  work,  etc. 

Book  paper  of  the  cheaper  grade  is  used  for  hand  bills,  etc.,  of 
limited  editions.  Also  for  cheap  pamphlets,  leaflets,  etc.  The  better 
grades  go  into  booklets,  circulars  and  cheap  catalogues.  Enameled 
and  Plate  paper  must  be  used  in  Catalogs,  where  half-tone  illustra- 
tions are  to  be  inserted,  also  for  fine  color  work. 

I  1311 


CHAPTER  XXVII. 

Writing  Paper. 
Writing  paper  is  used  for  all  kinds  of  commercial  forms,  which 
arc  impregnable  to  fluid  ink.  Plain  While  Writing,  Colored  Writing, 
Bond  Papers,  t-ipen  Papers,  I>edgcr  Papers,  all  come  under  this 
head.  Quality  and  finish  vary  very  much.  The  right  selection  of 
writing  papers  for  commercial  forms  is  very  important. 

Sizes  of  Writing  Papers  are  as  follows: 

Cap   14  X  ir  Double  Demy.  Broad 21  x  82 

Crown    j1(k19  Double   Demy,   Long 16x43 

Demy    16x81  Imperial    28x31 

Folio .....!......  .17  X  22  Double  Medium,  Broad 23  x  30 

Medium IS  K  2S  Double  Medium,  Long 18  x  46 

Royal  19  x24  Double  Royal,  Broad 24x88 

Double   Cat. 17x28  Double  Royal,  Long 1»  x  48 

Super  Royal 20  x  28 

Writing  Paper  is  used  for  all  kinds  of  commercial  and  legal 
forms,  letter  heads,  envelopes,  circulars,  announcements,  invitations, 
bank  checks,  etc.  • 

Cover  Paper. 

Cover  Papers  oflF.er  the  greatest  range  of  all  kinds  of  paper,  for 
they  compri.se  every  conceivable  shade  and  color  which  can  be  pro- 
duced. The  uses  of  these  stocks  seem  to  be  without  limit.  Another 
important  feature  in  modern  cover  papers  is  the  variety  of  finishes, 
antique,  laid,  linen,  hand-made,  crash  and  others  in  great  variety, 
contributing  to  the  style  and  quality  which  are  desired  in  work 
intended  primarily  to  attract  favorable  attention. 

Stock  sizes  in  Cover  Papers  are  20  x  25  and  22  x  28.  Other  sizes 
can  be  had  to  order  only.  Weights  can  be  obtained  in  these  sizes 
from  25  pounds  per  ream  to  125  pounds. 

Cover  papers,  as  the  name  implies,  are  mainly  used  for  covers  of 
pamphlets,  booklets,  folders,  catalogs,  etc.  In  the  selection  of  a 
cover,  the  text,  the  illustrations,  color  combination,  etc.,  must  be 
carefully  considered  to  obtain  the  desired  effect.  Cover  Papers, 
however,  can  also  be  used  for  many  kinds  of  printing  matter,  such 
as  programs,  folders,  leaflets,  letter  inserts,  circulars,  announce- 
ments, etc. 

Illustrations, 

The  illustrating  of  advertising  matter  is  done  by  various  pro- 
cesses. Mostly  half-tone  engravings,  line  engravings,  zinc  etchings 
or  wood  engravings  ar^  used. 

14321 


ADVERTISING. 

Half-tone  Engraving. 

Half-tone  Engraving  is  the  only  process  know^n  today  by  which 
Paintings,  Wash  Drawings.  Photographs  or  natural  objects  may  be 
engraved  by  chemical  methods  for  use  upon  the  printing  press. 

A  Negative  is  made  by  interposing  a  screen  between  the  object 
to  be  reproduced  and  the  sensitized  plate  in  the  camera.  This 
"screen"  consists  of  a  glass  plate  which  is  finely  ruled  with  horizontal 
and  vertical  lines.  It  divides  the  image  on  the  photographic  negative 
into  dots  and  lines.  A  print  from  the  negative  is  made  upon  a 
sensitized  copper  plate,  which  is  then  etched  in  an  acid  bath.  The 
size  of  the  dots  determines  the  printing  surface  of  the  plate. 

A  half-tone  plate  made  with  a  screen  of  60  lines  to  the  square 
inch  can  be  stereotyped  and  be  printed  on  the  perfection  presses  of 
the  metropolitan  dailies. 

A  half-tone  plate  made  with  screens  of  80  or  100  lines  will  print 
on  a  platen  press  on  news  or  book  paper.     It  can  be  electrotyped. 

A  half-tone  plate  made  with  screens  of  120  or  130  lines  can  be 
printed  on  super-calendared  book  paper  or  plate  paper,  but  not  on 
news  paper.     It  can  be  electrotyped,  or  better,  nickeltyped. 

Half-tone  plates  of  150  or  175  line  screens,  should  be  printed 
only  on  the  best  of  enameled  or  plated  paper.  Always  use  originals. 
The  copy  for  half-tone  engravings  ought  to  be  very  clean,  sharp 
and  distinct,  free  from  all  defects,  as  the  half-tone  is  an  absolutely 
faithful  reproduction  of  the  same.  In  cases  of  photographs  of  indus- 
trial objects,  where  much  detail  must  be  shown,  a  retouching  of  the 
photograph  is  necessary.  This  requires  very  difficult  art  work  and  is 
charged  extra. 

Line  Engraving  (Zinc  Etching)  can  be  made  from  any  Pen  and 
Ink  Drawing,  printed  matter,  or  anything  consisting  of  distinct  lines 
and  dots,  by  photographing  the  same  without  screen  and  printing 
from  the  negative  on  a  sensitized  zinc  plate.  This  is  then  etched  in 
an  acid  bath,  and  produces  a  perfect  printing  plate,  which  can  be 
used  as  original,  or  be  duplicated  by  stereotyping  or  electrotyping. 

Wood  Engraving. 

Wood  Engraving  has  been  to  a  great  extent  supplanted  by  the 
chemical  processes  of  engraving.  Still,  where  special  sharpness  of 
outline,  or  intricate  detail  work,  is  desired,  it  often  becomes  neces- 
.sary  to  have  the  subject  engraved  on  wood.  Then,  again,  it  is  de- 
cidedly the  best  process  for  mechanical  subjects  and  illustrations 
which  are  to  be  extensively  duplicated. 

[433] 


CHAPTER  XXII. 

EUECTROTYPING. 

Electrotyping  is  not  engraving,  but  a  process  for  duplicating 
engravings,  cuts,  type  forms,  etc.  A  mold  of  the  object  to  be  dupli- 
cated is  taken  in  wax,  and,  together  with  a  piece  of  copper,  the  mold 
is  hung  into  an  acidulated  solution  of  copper  sulphate.  An  electric 
current  is  led  into  the  vat  and  with  its  aid  a  deposit  of  copper  forms 
on  the  mold.  When  this  shell  of  copper  is  of  sufficient  thickness,  it 
is  removed  from  the  mold  and  backed  up  with  type  metal.  The  plate 
thus  obtained  is  then  mounted  on  wood  or  metal  and  finished  for 
use  on  the  printing  press. 

The  quality  of  the  electrotype  depends  on  the  skillfulness  of  the 
molder.  the  length  of  time  given  for  the  deposit  of  the  copper  and 
on  the  work  by  the  finisher.  The  life  of  the  electrotj'pe  depends  on 
the  quality.  Good  electrotj'pes  will  stand  250,000  impressions  or 
more.  Poor  electrotypes  will  wear  out  with  10,000  impressions,  if 
the  patience  of  the  printer  lasts  that  long. 

NiCKELTYPING. 

NicKELTYPiNG  involves  practically  the  same  process  as  electro- 
typing,  only  nickel  metal  is  used  instead  of  copper.  The  finer  fibre 
of  Nickel  results  in  a  sharper  duplicate  and  an  improved  printing 
surface.  Nickeltyping  is  to  be  preferred  in  the  duplicating  of  half- 
tones. 

Stereotyping. 

Stereotypes  are  almost  exclusively  used  by  newspapers  for  dupli- 
cating their  forms.  A  mold  or  matrix  is  made  by  beating  wet  paper- 
mache  into  the  form  and  drying  and  hardening  this  matrix  by  heat- 
ing the  form  to  a  high  temperature.  The  matrix  is  placed  in  a  cast- 
ing box  and  melted  type  metal  poured  thereon.  Wood  base  cuts 
should  not  be  used  in  any  form  which  is  to  be  stereotyped. 


[434] 


APPENDIX. 


CONSTITUTION. 


ARTICLE   I. 

NAME    AND    LOCATION. 

Section  1.    The  name  of  this  Association  shall  be 

and  its  principal  office  shall  be  located  in 

,  in County,  in  the 

State  of  Ohio. 

ARTICLE   II. 

PURPOSE. 

Section  1.  This  Association  is  organized  for  the  purpose  of 
raising  money  to  be  loaned  to  its  members  and  others,  and  for  such 
other  purposes  as  are  authorized  by  law. 

ARTICLE    III. 

CAPITAL    STOCK. 

Section  1.     The  capital  stock  shall  be  $ divided  into 

shares  of  $ each. 

Sec.  2.  Stock  may  be  issued  to  members  in  whole  or  fractional 
shares  upon  such  terms  and  conditions  as  the  By-Laws  may  provide. 

ARTICLE  IV. 

MEMBERS. 

Section  I.  Any  one,  upon  subscribing  for,  or  in  any  manner 
becoming  entitled  to,  or  the  owner  of  any  part  of  the  capital  stock 
of  this  Association,  shall  be  deemed  a  member  thereof  and  a  stock- 
holder therein  to  the  extent  of  the  balance  of  his  credits  of  record 
on  account  of  said  stock. 

Sec.  2.  At  all  meetings  of  the  members,  each  member  having 
stock  of  record  for  at  least  30  days  prior  thereto,  shall  be  entitled 
either  in  person  or  by  proxy  held  by  a  member,  to  one  vote  for  each 
share  of  stock,  and  a  proportionate  fractional  vote  for  each  fractional 
share  of  stock,  so  held  of  record  by  him,  and  on  which  all  past  due 


•  .Specimen  Constitution  prepared  by  the  Ohio  IJuilding  Association   League 
Committee. 

[4351 


APPENDIX. 

installments  of  dues  and  other  charges  have  been  fully  paid,  but  no 
member  shall  cumulate  his  votes,  and  no  member  shall  vote  more 
than  twenty  shares  held  in  his  own  right. 

ARTICLE    V. 

ANNIIAI,     MEETINGS. 

Section  1.  An  annual  meeting  of  the  members  of  this  Association 
for  the  election  of  Directors,  the  consideration  of  amendments  to  this 
Constitution,  and  for  the  transaction  of  all  other  proper  business  shall 
be  held  at  the  office  of  the  association,  or  at  such  other  place  as  the 

Board  of  Directors  may  appoint,  on  the day  of 

of   each   year,    o'clock m. 

Sec.  2.  Should  the  Board  of  Directors  appoint  any  place  other 
than  the  office  of  the  Association  for  such  meeting,  they  shall  publish 
a  notice  of  the  same,  in  some  newspaper  regularly  issued  in  and  of 
general  circulation  in County,  Ohio. 

Sec.  3.  All  elections  of  Directors  shall  be  by  ballot,  and  the  polls 
for  voting  shall  be  kept  open  from  7  :00  p.  m.  until  9  :00  p.  m.  They 
shall  be  conducted  by  two  judges  and  two  clerks,  previously  ap- 
pointed by  the  Board.  A  plurality  of  the  votes  cast  shall  be  sufficient 
to  elect  and  in  case  of  a  tie  between  candidates,  it  shall  be  decided 
by  lot. 

Sec.  4.     The  members  present  shall  constitute  a  quorum. 

Sec.  5.  Candidates  for  Directors  may  be  nominated  by  any  mem- 
ber by  filing  the  names  of  the  same  with  the  Secretary  at  least  two 
weeks  prior  to  the  election. 

ARTICLE   VI. 

WEEKLY    MEETINGS.* 

Section  1.  Weekly  meetings  of  the  Association  and  the  Board 
of  Directors,  for  the  receipt  of  money,  the  making  of  loans,  and  for 
the  transaction  of  all  the  ordinary  business  of  the  Association,  shall 
be  held  at  the  office  of  the  Association  at  such  times  as  the  By-Laws 
may  provide. 

ARTICLE   VII. 

DIRECTORS    AND    OFFICERS. 

Section  1.     This  Association  shall  have  a  Board  of 

Directors,  elected  by  the  members  in  such  number  at  each  annual 
meeting,  to  serve  for  such  times  that  the  terms  of  one-third  of  the 
Directors  as  nearly  as  may  be  will  expire  each  year. 


•  To  associations  that   have   weekly   meetinfrs  as  their  only  office  hours  the 
above  is  recommended.     Otherwise  see  Sec.  3,  Art.  VII. 

[436] 


CONSTITUTION  AND  BY-LAWS. 

Sec.  2.  The  Directors  shall  choose  annually  a  President,  one  or 
more  Vice-Presidents,  from  their  number,  and  a  Secretary,  Treas- 
urer, and  Attorney,  who  may  or  may  not  be  members  of  the  Board. 
They  may  create  such  committees  as  they  may  deem  necessary. 

Sec.  3.  The  Directors  shall  hold  at  least  one  meeting  each  week 
at  such  time  and  place  as  they  may  select,  or  as  the  By-Laws  may 
provide ;  members  shall  constitute  a  quorum. 

Sec.  4.  The  Directors  shall  have  the  right  to  fill  all  vacancies 
occurring  in  their  own  body,  or  in  any  of  the  offices  of  the  Associa- 
tion, for  the  unexpired  term. 

Sec.  5.  The  Directors  shall  fix  the  salaries  and  determine  the 
compensation  of  all  officers  and  employes  of  the  Association,  and 
they  may,  at  their  discretion,  remove  or  suspend  any  officer  or  em- 
ploye for  malfeasance  in  office  or  neglect  of  his  duties. 

Sec.  6.  The  Directors  shall  have  the  power  to  adopt,  amend, 
repeal  and  enforce  such  By-Laws,  resolutions  and  orders  as  they 
may  deem  necessary  to  enable  them  to  properly  manage  and  control 
all  the  business,  property',  rights,  and  affairs  of  this  Association. 
They  shall  provide  for  the  issue  and  cancellation  of  stock ;  for  the 
deposit  with  and  the  withdrawal  of  funds  from  designated  deposi- 
taries ;  and  the  carrying  of  funds  in  the  office  of  the  Association 
for  the  most  convenient  transaction  of  business ;  for  the  making  of 
loans,  and  no  loan  shall  be  made  until  it  has  been  approved  by  the 
Board  of  Directors ;  and  they  are  hereby  authorized  to  do  all  and 
singular  the  things  necessary  to  enable  this  Association,  through 
them,  to  exercise  all  the  powers  authorized  by  law  that  are  not  in- 
consistent with  this  Constitution. 

ARTICLE    Vin. 
amendments  to  constitution. 

Section  1.  This  Constitution  may  be  amended  at  any  annual 
meeting  of  the  stockholders  of  the  Association  by  a  two-thirds  vote 
of  the  stock  represented  in  person  or  by  proxy  held  and  voted  by 
members  of  this  Association ;  provided,  however,  that  all  proposals  to 
amend  shall  be  presented  in  writing  to  the  Board  of  Directors  at  some 
regular  meeting,  at  least  thirty  days  prior  to  the  annual  meeting,  and 
the  amendment  adopted  shall  be  substantially  the  same  as  proposed. 

ARTICLE   IX. 
consolidation  or  dissolution. 
Section  I.     The  Association  being  a  permanent  one,  it  cannot  be 
determined  at  what  time  it  shall  or  can  be  consolidated  or  dissolved. 

1437] 


APPENDIX. 

If,  however,  the  shareholders  desire  to  consolidate  or  dissolve  it,  a 
resolution  in  writing,  signed  by  members  representing  at  least  one- 
third  of  the  shares,  asking  for  such  consolidation  or  dissolution, 
must  be  submitted  to  the  Directors  at  a  regular  meeting.  The  Board 
of  Directors  shall  then  take  the  legal  course  for  calling  a  special 
meeting  of  the  shareholders  to  act  on  the  resolution.  If  two-thirds 
of  all  the  shares  vote  by  ballot  for  a  consolidation  or  dissolution  of 
the  association  it  shall  be  consolidated  or  dissolved.  The  Board  of 
Directors  shall  then  take  the  necessary  steps  to  consolidate  or 
liquidate  the  affairs  of  the  Association. 


BY-LAWS. 


PRESIDENT     AND    VICE-PRESIDENT. 

Section  1.  The  President  shall  preside  at  all  meetings  of  the 
Association,  and  of  the  Directors,  and  shall  perform  such  other 
duties  as  usually  pertain  to  his  office,  or  may  be  required  of  him. 

Sec.  2.  Any  Vice-President  shall  perform  the  duties  of  the 
President  in  his  absence  or  disability. 

SECRETARY. 

Sec.  3.  The  Secretary  shall  keep  a  complete  record  of  all  the 
proceedings  of  the  Board  of  Directors,  and  of  all  members'  meet- 
ings. He  shall  be  the  general  receiving,  disbursing  and  managing 
officer  of  the  Association,  and  under  the  Board  of  Directors  and  its 
committees,  and  with  the  assistance  of  such  employes  and  other  of- 
ficers as  the  Board  may  provide,  shall  have  the  care  and  management 
of  all  the  Association's  business,  property,  rights,  and  affairs,  not 
otherwise  provided  for. 

TREASURER.* 

Sec.  4.  (*Inasmuch  as  the  Treasurer  is  optional,  associations 
can  make  their  own  provisions.) 

ATTORNEY. 

Sec.  5.  The  Attorney  shall  make  or  cause  to  be  made  all  neces- 
sary and  proper  search  and  examination  of  the  title  to  property  of- 
fered as  security  for  loans ;  shall  see  that  the  mortgages  made  to  this 
association  or  purchased  by  it,  and  all  assignments  of  mortgages,  are 
properly  drawn,  executed  and  recorded,  and  file  with  the  secretary 

[^38] 


CONSTITUTION  AND  BY-LAWS. 

his  report  in  writing  of  the  condition  of  title  to  premises  described 
in  each  mortgage.  He  shall  represent  the  Association  in  all  legal 
proceedings  in  which  it  is  interested  and  shall  have  power  to  enter 
its  appearance  therein ;  he  shall  give  his  advice  and  counsel  when- 
ever requested,  draw  all  necessary  legal  papers  and  render  such 
further  services  as  the  Board  may  require. 

Committees  of  the  Board  of  Directors, 
executive  or  finance  committee. 
Sec.  6.     (As  this  varies  so  much  we  recommend  that  each  asso- 
ciation adopt  such  provisions  as  are  best  fitted  for  their  work.) 

APPRAISING  OR  SECURITIES  COMMITTEE. 

Sec.  7.  (As  this  varies  so  much  we  recommend  that  each  asso- 
ciation adopt  such  provisions  as  are  best  fitted  for  their  work.) 

INDEMNITY    BONDS. 

Sec.  8.  All  officers  and  employes  who  have  charge  or  possession 
of  money,  securities  or  property,  before  entering  upon  their  duties, 
shall  give  bond  with  at  least  two  sufficient  sureties,  or  issued  by 
an  authorized  surety  company  to  the  satisfaction  of  the  Board  of 
Directors. 

TENURE   OF   OFFICE. 

Sec.  9.  AU  officers  and  members  of  standing  committees  shall 
serve  until  their  successors  shall  be  chosen  and  qualified. 

MEETINGS   OF  DIRECTORS. 

Sec.   10.     Regular   meetings   of   the  Board   shall   be  held  at  the 

offices  of  the  Association  on  the   day  of  each  week,  at 

o'clock m. 

Sec.  11.  Special  meetings  may  be  called  at  any  time  by  the  Presi- 
dent or  Secretary  by  notice  to  each  Director,  whenever  the  business 
of  the  Association  may  require.  A  majority  of  the  Board  shall 
constitute  a  quorum,  but  no  loan  shall  be  approved  except  by  the 
unanimous  vote  of  all  Directors  present. 

Sec.  12.     (Each  association  shall  fix  its  own  hours  of  business.) 

WHO   AUTHORIZED  TO   SIGN    FOR   THE    ASSOCIATION. 

Sec.  13.  All  certificates  of  stock  and  all  releases  of  mortgages 
shall  be  signed  by  the  President  and  Secretary,  and  all  certificates  of 
deposits,  all  orders,  checks,   drafts,  and  other  instruments   for  the 

inoi 


APPENDIX. 

receipt  or  disbursement  of  money,  aitd  all  other  instruments  in  writ- 
ing not  otherwise  provided  for,  shall  be  signed  by  the  Secretary  or 
disbursing  officer  or  officers. 

DErOSITORllCS  AND  DISUURSEMENTS. 

Sec.  14.  All  funds  shall  be  under  the  control  of  the  Board  of 
Directors,  who  shall  cause  the  same  to  be  deposited  in  the  name  of 
the  association  with  its  designated  depository  or  depositories,  and 
such  funds  can  be  withdrawn  from  such  depositaries  only  on 
check  signed  by  the  disbursing  officer  or  officers  for  withdrawals, 
dividends,  disbursements  on  loans,  investments,  expenses  of  manage- 
ment and  for  all  such  other  purposes  as  the  Board  of  Directors  deem 
necessary  for  carrying  on  the  business  of  the  Association. 

Sec.  15.  For  cash  payments  in  the  current  business  of  the  office 
the  disbursing  officer  or  officers  are  authorized  to  draw  money  from 
the  depositories  of  the  Association  as  other  funds  are  withdrawn,  in 
such  sums  as  the  Board  of  Directors  from  time  to  time  may  order. 

Stock, 
running  stock. 
Sec.  16.  Members  who  do  not  pay  the  face  value  of  their  stock 
at  the  time  of  subscribing,  may  pay  the  same  in  installments  of  not 
less  than  25  cents  per  week  on  each  $100.00  thereof,  for  which  pay- 
ment receipt  shall  be  given  them  in  a  pass-book,  and  each  member  so 
paying  shall  at  any  time  be  deemed  the  owner  of  stock  equal  to  the 
balance  of  his  credit  on  his  pass-book,  and  a  certificate  of  paid-up 
stock  may  be  issued  for  the  even  hundreds  thereof. 

PAID-UP   STOCK. 

Sec.  17.  Where  the  face  value  of  the  stock  is  paid  at  the  time 
of  subscribing,  a  certificate  therefore  may  be  executed  by  the  Presi- 
dent and  Secretary  and  delivered  to  the  member. 

LOAN     STOCK.* 

Sec.  18.  Loan  stock  may  be  issued  at  the  option  of  the  Board  of 
Directors  to  anyone  desiring  to  make  a  mortgage  loan.  Each  owner 
of  this  stock  shall  make  such  payment  thereon  as  shall  be  agreed  upon 
in  making  the  mortgage  loan.  The  Association  may,  at  its  option, 
or  when  the  member  requests  it  and  the  Association  will  consent, 
apply  the  net  credit  on  the  stock  to  the  payment  of  the  mortgage 
loan  and  the  charges  thereunder,  with  such  cancellation  of  stock  and 


*  This  section  18  to  be  used  if  you  want  to  make  all  loans  bona  fide  on 
stock  and  keep  all  loan  accounts  separate  from  running  stock.  If  used  must  be 
reconciled  with  section  38. 

[440] 


CONSTITUTION  AND  BY-LAWS. 

reduction  of  the  general  pa>-ments  as  the  Association  will  permit. 
All  advance  payments  thus  applied  shall  be  deducted  from  the  agreed 
pa>Tnent  credits. 

PERMANENT     STOCK. 

Sec.  19.  Permanent  stock  of  the  par  value  of  one  hundred  dollars 
per  share  may  be  issued,  which  shall  constitute  the  permanent  capital 
of  the  Association,  and  cannot  be  withdrawn  until  the  final  dissolu- 
tion of  the  Association. 

DEPOSITS. 

Sec.  20.  Special  deposits  of  money  may  be  received  by  the  Asso- 
ciation at  such  times  and  in  such  amounts  and  upon  such  terms  and 
conditions  as  the  Board  may  order  or  as  may  be  agreed  upon  at  the 
time  of  the  deposit,  and  such  special  deposits  can  be  withdrawn  only 
upon  the  same  terms  as  are  provided  for  withdrawing  members  in 
the  general  withdrawal  rule  of  this  Association,  unless  otherwise 
specially  specified  in  the  certificate  or  other  evidence  of  deposit. 

TRANSFERS. 

Sec.  21.  All  transfers  of  stock  and  deposits  shall  be  in  writing, 
properly  signed,  and  shall  not  be  valid  as  against  the  Association 
until  the  transfer  shall  be  duly  entered  upon  its  books  upon  surrender 
of  the  certificate  or  pass-book;  and  all  stock  and  deposits  shall  be 
subject  to  a  first  lien  thereon  in  favor  of  the  Association  for  any 
indebtedness  of  the  member  to  the  Association. 

JOINT  AND   SURVIVORSHIP   ACCOUNT. 

Sec.  22.  Both  stock  and  deposit  accounts,  whether  evidenced  by 
certificates,  pass-books,  or  otherwise,  may  be  issued,  carried  and  paid 
as  joint  and  survivorship  accounts,  in  the  names  of  two  or  more 
persons,  whether  adults  or  minors,  when  the  joint  owners  have  given 
to  the  Association  a  joint  order  in  substance  or  effect  as  follows: 

We,  the  undersigned  owners  of  joint 

account    No ,   in 

Association  of  Ohio,  do  hereby 

agree  and  jointly  authorize  and  order  said  .Association  to  pay  any 
and  all  of  the  credits  now  or  hereafter  on  said  account,  on  the  order 
of  any  one  or  more  of  us,  both  before,  after  and  notwithstanding  the 
death  or  other  incapacity  of  any  one  or  more  of  us.  And  such  pay- 
ment shall  be  a  valid  acquittance  of  said  Association  as  against  any 
one  at  any  time  concerned. 
Done 19--- 


1111 


APPENDIX. 

CANCELLATION   OF   STOCK. 

Sec.  23.  The  Board  of  Directors  may  require  any  member  to 
surrender  his  pass-book  or  certificate  and  receive  the  amount  stand- 
ing to  his  credit  together  witJi  all  dividends  declared  and  remaining 
unpaid  thereon  and  an  equitable  share  of  the  earnings  of  the  Asso- 
ciation since  the  last  dividend  was  declared,  to  be  determined  by 
the  Board.  All  rights  as  members  shall  cease  with  the  notice  to 
surrender. 

GENERAL   WITHDRAWAL  RULE. 

Sec.  24.  Members  and  special  depositors  whose  stock  or  deposits 
are  not  pledged  to  tliis  Association  may  as  a  general  rule,  upon  writ- 
ten application  to  tlie  Secretary,  witJidraw  all  or  any  part  of  their 
stock,  credits  or  deposits  at  any  time  without  previous  notice,  but  to 
protect  the  interest  of  depositors  and  borrowers  and  avoid  sacrifice 
of  securities  notices  of  withdrawal  may  at  any  time  be  required  and 
the  liability  to  pay  further  dues,  and  the  right  to  dividend  on  stock 
credits  and  interest  on  special  deposits  shall  cease  with  any  applica- 
tion to  withdraw.  All  persons  withdrawing  shall  be  entitled  to  re- 
ceive the  amount  of  all  credits  at  the  time  of  the  application  to  with- 
draw less  any  member's  share  of  the  Association's  loss  in  excess  of 
the  contingent  fund.  The  required  notices  to  withdraw  shall  be 
filed  in  the  order  in  which  they  are  received  and  paid  from  the 
regular  receipts  of  the  Association  in  the  order  in  which  they  are 
filed  as  fast  as  50  per  cent  of  the  regular  receipts  of  the  Association 
will  pay  them ;  but  the  Board  of  Directors  may,  at  its  discretion,  use 
all  the  regular  receipts  of  the  Association  to  pay  withdrawals. 

All  withdrawals  shall  be  taken  from  the  oldest  deposits  and  no 
withdrawal  from  any  one  account  or  certificate  shall  exceed  one 
thousand  dollars  in  each  thirty  days  ahead  of  other  pending  applica- 
tions for  withdrawal ;  but  the  Board  of  Directors  may,  at  its  discre- 
tion, pay  withdrawals  not  exceeding  $25  at  one  time,  nor  exceeding 
$100  within  thirty  days  regardless  of  the  order  of  application. 

Sec.  25.  In  case  of  the  loss  of  a  pass-book  or  certificate,  pay- 
ment of  the  money  deposited  thereon  may  be  made  on  such  terms 
as  the  Board  may  prescribe. 

EARNINGS. 

Sec.  26.    How  Distributed.    On  the  first  of 

and of  each  year  the  earnings  of  the 

Association  for  the  preceding  six  months  shall  be  ascertained.     Out 
of  these  there  shall  be  deducted  and  be  applied  as  follows : 

[•142] 


CONSTITUTION  AND  BY-LAWS. 

First — All  expenses,  whether  paid  or  not,  and  interest  due. 

Second — Such  sum  as  the  Board  may  determine  for  the  Reserve 
Fund;  provided  that  not  less  than  the  amount  required  by  law  shall 
be  so  reserved. 

Third — Such  dividend  as  the  Board  may  declare  to  be  computed 
and  paid  as  hereinafter  provided. 

Fourth — The  residue  of  said  earnings  may  be  carried  as  Un- 
divided Profits,  to  be  used  as  other  profits  in  such  way  as  the  Board 
under  the  law  may  direct ;  provided,  that  the  total  Undivided  Profits 
shall  at  no  time  exceed  3  per  cent  of  the  assets. 

DIVIDENDS. 

Sec.  27.  Such  dividend  as  the  Board  may  declare  shall  be  divided 
among  the  members  in  proportion  to  the  amount  of  money  deposited 
on  stock  by  each  and  the  length  of  time  the  same  has  been  on  deposit 
with  the  Association  less  the  withdrawals. 

PLAN   FOR  C.\LCL'LATiON   OF  DIVIDENDS. 

Sec.  28.  (Owing  to  the  difference  of  plans  this  is  left  to  the 
individual  associations.) 

LOANS    AND    INVESTMENTS. 

Sec.  29.  To  Whom  Made.  The  funds  of  this  Association  shall 
be  loaned  to  its  members  and  others  on  such  terms  and  at  such  rates 
of  interest  as  shall  be  fixed  by  the  Board  of  Directors. 

Sec.  30.  Security.  All  loans  made  by  this  Association  shall  be 
secured  by  pledge  of  pass-book  or  certificate  of  this  Association  on 
which  there  has  been  paid  in  a  sum  equal  to  the  amount  loaned, 
which  shall  be  known  as  temporary  loans ;  or  by  first  mortgage  of 
real  estate,  which  shall  be  known  as  "Mortgage  Loans";  or  by  pledge 
of  such  other  securities  as  may  be  acceptable  to  the  Board  of 
Directors,  which  shall  be  known  as  collateral  loans.  But  second 
mortgage  of  real  estate  may  be  taken  where  this  Association  already 
holds  first  mortgage. 

Sec.  31.  Temporary  Loans.  These  loans  may  be  made  by  the 
Secretary  at  any  time  when  there  is  money  in  the  treasury  not  other- 
wise appropriated  and  upon  such  terms  and  coiKlitions  as  the  Board 
may  from  time  to  time  prescribe. 

Sec.  32.  Mortgage  Loans.  Loans  on  mortgage  shall  be  made  only 
on  application  signed  by  the  borrower  or  his  agent,  and  containing 
such  information  concerning  the  security  offered  as  the  Board  may 


APPENDIX. 

require.  Such  applications  shall  pass  at  once  to  the  Appraising  G>m- 
inittee,  who  shall  report  on  the  security  offered  as  soon  as  possible 
and  when  the  Board  has  signified  its  approval  of  the  loan,  the 
application  shall  pass  to  the  attorney,  who  shall  see  that  the  neces- 
sary papers  are  executed  and  the  loan  completed ;  provided,  the  title 
to  the  property  is  satisfactory.     Mortgage  loans  shall  be  limited  to 

per  cent  as  nearly  as  may  be,  of  the  value  of  the  security  offered 

and  where  the  money  is  loaned  for  the  purpose  of  erecting  buildings 
on  the  property  mortgaged,  it  shall  be  advanced  as  the  building 
progresses  in  such  installments  as  the  Board  may  determine. 

Sec.  33.  Repayment  of  Loans.  Loans  may  be  made  payable  in 
fixed  annual  or  semi-annual  payments,  which  shall  be  known  as 
straight  loans  or  in  stated  weekly  or  monthly  payments,  which  shall 
be  known  as  installment  loans.  The  terms  and  conditions  of  each 
loan  shall  be  set  forth  in  the  obligation  given  by  the  borrower  for 
the  repayment  of  the  same,  but  in  all  installment  loans  the  rate  of 
payment  shall  be  not  less  than  one  dollar  per  month  on  each  $100.00 
borrowed,  and  the  borrower's  payments  shall  be  applied: 

First — To  the  discharge  of  the  interest. 

Second — To  the  repayment  of  insurance,  taxes  or  other  charges 
against  the  borrower  provided  for  in  these  By-Laws  or  in  his 
obligation. 

Third — The  remainder  of  the  borrower's  payments  shall  be 
credited  upon  tlie  principal  of  his  obligation  at  such  stated  intervals 
as  the  Board  may  prescribe,  which  said  intervals  shall  also  be  stated 
in  the  borrower's  obligation,  and  interest  shall  thereafter  be  charged 
only  upon  the  amount  which  the  borrower  still  owes. 

Sec.  34.  Collateral  Loans.  Loans  on  collateral  security  shall  be 
made  only  when  there  is  money  in  the  treasury  in  excess  of  the 
demand  for  mortgage  and  temporary  loans.  The  procedure  for 
obtaining  a  loan  on  collateral  shall,  as  far  as  possible,  conform  to 
that  prescribed  for  obtaining  a  loan  on  mortgage. 

Sec.  3.5.  Insurance.  When  the  Board  of  Directors  see  fit  they 
may  require  any  borrower  to  cause  the  buildings  on  mortgaged 
property  to  be  insured  for  the  benefit  of  this  Association  against  loss 
by  fire  in  some  fire  insurance  company  to  be  approved  by  them,  in  an 
amount  which  they  shall  name,  and  to  keep  the  same  insured  during 
the  continuance  of  the  loan,  and  the  policy  of  insurance,  properly 
endorsed  by  the  Company  issuing  the  same,  shall  be  deposited  with 
the  Secretary.     Upon  the  failure  of  any  borrower  to  so  insure  said 

[444] 


CONSTITUTION  AND  BY-LAWS. 

property  as  required,  or  upon  expiration  or  cancellation  of  any 
policy  deposited  as  aforesaid,  the  Board  may  insure  the  same  at  the 
expense  of  such  borrower. 

Sec.  36.  Taxes.  If  any  property  mortlfaged  to  the  Association 
be  in  default  for  non-payment  of  taxes,  the  Board  of  Directors  may 
instruct  the  Secretary  to  pay  the  same  and  charge  the  amount  to  the 
borrower. 

Sec.  37.  Interest  on  Above  Payments.  All  sums  advanced  as 
above  provided,  for  insurance  and  taxes  on  property  mortgaged  to 
this  Association,  shall  bear  the  same  rate  of  interest  as  the  principal 
debt,  and  the  mortgage  given  to  secure  any  debt  shall  also  stand  as 
security  for  the  repayment  of  such  insurance  and  taxes  and  the 
interest  thereon. 

Sec.  38.  Foreclosures.  If  any  borrower  shall  permit  any  pay- 
ment required  by  his  obligation  to  remain  due  and  unpaid  for  the 
period  of months,  the  entire  amount  of  such  loan  shall  there- 
upon become  due  and  payable,  and  the  Directors  may  order  such 
mortgage  foreclosed. 

Sec.  39.  Expense  of  Loans.  The  cost  of  viewing  the  property, 
examining  the  records  and  any  other  evidence  of  title,  and  preparing 
and  recording  the  mortgage  for  loans  on  real  estate  shall  be  fixed 
by  the  Board  of  Directors,  and  shall  be  paid  by  the  borrower. 

Sec.  40.  Investments.  The  funds  of  this  Association  may  be 
invested  as  provided  by  law. 

Sec.  41.  Reports.  Each  member  shall  be  entitled  to  receive  semi- 
annual or  annual  reports,  showing  the  condition  of  the  Association. 

miscellaneous. 

Sec.  42.  Re-Issue  of  Stocks.  All  shares  withdrawn  and  for- 
feited and  all  shares  paid  up  and  the  money  thereon  withdrawn,  and 
also  all  shares  on  which  loans  have  been  taken  and  cancelled  or  paid 
up,  shall  revert  to  and  become  the  property  of  the  Association,  and 
may  be  re-issued  by  the  Board  of  Directors. 

Sec.  43.  Pass-Book.  All  pass-books  shall  be  handed  in  to  the 
Secretary  for  audit  in and of  each  year. 

Sec.  44.  Amendments.  These  By-Laws  may  be  amended  at  any 
regular  meeting  of  the  Board  of  Directors  by  a  two-third  vote  of  the 
Directors  present,  but  all  proposals  to  amend  tlie  same  .shall  be  made 
in  writing  at  a  regular  meeting  of  the  Board  of  Directors,  at  least 
ten  days  before  action  is  taken  thereon. 

1 44.'.  I 


APPENDIX. 

RULES. 

In  order  that  the  members  may  at  all  times  be  informed  as  to 
the  proper  rotation  or  order  of  business,  and,  particularly  for  the 
convenience  of  the  directors  themselves,  the  directors  should  adopt 
a  set  of  rules  for  governing  tlie  business  of  the  association.  These 
should  be  prepared  carefully  and  changed  and  amended  from  time 
to  time  as  may  be  found  necessary  in  order  to  make  them  more 
practicable  and  popular  among  the  members.  Since  such  rules  must 
be  arranged  to  suit  local  conditions  and  circumstances  it  is  not 
possible  to  outline  them  very  specifically  in  a  general  work  of  this 
character. 

The  object  of  the  business  rules  of  an  association  and  the  policy 
of  the  directors  should  be  to  have  the  business  so  arranged  that  it 
w^ill  run  along  smoothly  and  rapidly,  without  friction  or  delay,  so 
that  members  may  not  be  annoyed  by  having  to  wait.  At  the  same 
time  the  meetings  should  be  made  of  a  pleasant  and  sociable  a  char- 
acter as  possible  so  as  to  be  enjoyable  to  members  and  visitors. 
Particular  pain&  should  be  taken  by  the  directors  to  make  the  meet- 
ings suitable  and  pleasant  places  for  ladies  to  visit,  for  quite  a 
number  of  ladies  become  members  of  associations. 

A  few  specimen  rules  are  given  below  which  will  be  found 
suggestive : 

1.  At  the  specified  time  for  the  collection  of  dues  the  president 
shall  call  the  meeting  to  order,  and  the  secretary  and  his  assistants 
and  the  members  of  the  finance  committee  shall  take  their  respective 
places. 

2.  The  secretary  of  an  Assistant  shall  enter  all  dues  paid  in  in 
the  Dues  Register  and  the  members  of  the  finance  committee  shall 
count  all  moneys  and  receipt  for  them.* 

3.  When  the  time  for  receiving  money  has  expired  the  secre- 
taries and  the  finance  committee  shall  count  the  receipts  and  check 
up  the  books. to  see  if  the  receipts  and  entries  correspond.  As  soon 
as  this  is  done  they  shall  report  to  the  president  that  they  are  ready 
to  proceed  with  the  further  business  of  the  evening. 


•  •  In  some  associations  the  rule  is  that  an  assistant  secretary,  or  a  member 
of  the  finance  committee,  shall  make  the  entries  in  the  Dues  Register,  and  the 
secretary"  himself  shall  attend  to  issuing  books  to  new  members  and  other  mis- 
cellaneous business  of  that  kind,  and  particularly  to  giving  information  and 
answering  the  numerous  questions  that  are  always  being  asked  by  members  in 
an  association. 

During  the  time  of  receiving  dues  the  directors  who  are  not  officers  or  mem- 
bers of  the  finance  committee  should  make  themselves  useful  by  circulating 
among  the  members  and  visitors  present,  making  them  acquainted  with  one 
another,  giving  information  in  regard  to  the  association  and  its  work,  and 
making  the  meeting  as  pleasant  and  attractive  as  po»sible. 

[446J 


CONSTITUTION  AND  BY-LAWS. 

4.     The  following  shall  be  the  order  of  business  for  the  directors' 
meeting : 

(1)  Call  to  order. 

(2)  Roll  call. 

(3)  Reading  of  minutes. 

(4)  Sale  of  money.* 

(5)  Reports  of  officers  and  committees. 

(6)  Unfinished  business. 

(7)  Miscellaneous  and  new  business. 

(8)  Reports  of  receipts  and  disbursements. 

(9)  Adjournment. 


*  The  sale  of  money  should  be  placed  as  early  as  possible  on  the  order  of 
business  so  as  not  to  keep  members  waiting  too  long.  The  directors'  meeting  doe^ 
not  begin  until  after  the  time  of  receiving  dues  has  expired.  Members  who 
come  early  in  the  evening,  in  time  to  pay  their  dues,  and  are  then  compelled  to 
wait  until  the  directors  transact  all  other  business  before  they  can  bid  on  money, 
find  the  delay  very  irksome  and  annoying. 


■H7| 


APPENDIX. 

Laws  of  Ohio  Relating  to  Building  and 
Loan  Associations 

(KoiToi's  Note — We  herewith  .sbow  Ohio  State  Laws  because  of  their  con- 
crtfc  form.  Much  time  h;».s  been  given  the  subject  in  the  Ohio  legislature  by 
Representatives,  most  of  whom  had  actual  liuilding  Association  Kxperience,  and 
were  members  of  the  legislative  Committee  of  the  Ohio  State  Leajfue.  These 
laws  will  serve  as  a  safe  guide  on  similar  legi.slation  in  other  states.] 

Gknp.ral    Code  CfP.NKRAi,    Coi  e 

SECTION  SliCTION 

9643   Interpretation   of   terms.  9600   Idle    funds,   how   invested. 

064  4   Name.  9G61    May  deposit  idle  funds. 

9045   When     business     may     be  com-       0662    Purchase  interest-bearinir  obliga- 

nienccd.  tions ;     sale     of     to     close     up 

9616   Directors,    term    of    office.  business    permitted. 

9647  Powers.  9663   Distribution    of    earnings. 

9648  Receiving    of    deposits;    joint    ac-       9604   Certificate   of    increase,    decrease, 

counts.  etc.,    where   filed. 

9649  Issue  of   stock,   vote.  9605  Dissolution. 

9050  Assessments.  9606  Amendment    of   articles. 

9651  Withdrawal  of  stock  deiwsits.  9667   Constitution  and  by-laws. 

965!  Withdrawing  of  deposits.  0008   Other   jxiwers. 

9653  Cancellation.  0069   Hanks,  designation  of,  to  receive 

0654  Rules   as   to    minors.  funds. 

9658  Property,   leasing,   holding   of.  9670   Bond    of   officers. 
9656  Borrowing   money.  9071    Reserve   fund. 
9057  I^ans.  9072   K.xpenses,  how  paid. 
9656  Cancellation   of   loan.  9673   Dividends. 

9659  Reserve     and      undivided      profit       9674   Losses. 

fund.  9075  Listing  of  shares  for  taxation. 

Interpretation  of  terms. 

Sec.  9643.  A  corporation  for  the  puropse  of  raising  money  to  be 
loaned  to  its  members,  and  otiiers,  shall  be  known  in  this  chapter, 
and  in  the  laws  relating  to  the  bureau  of  building  and  loan  asso- 
ciations, as  a  "building  and  loan  association,"  or  as  a  "savings  asso- 
ciation." Associations  organized  under  the  laws  of  this  state  shall 
be  known  as  "domestic"  associations,  and  those  organized  under  the 
laws  of  other  states  or  territories,  as  "foreign"  associations.  Asso- 
ciations may  be  organized  and  conducted  under  the  general  laws 
of  Ohio  relating  to  corporations,  except  as  otherwise  provided  in 
this  chapter.     (99  v.  528-1.) 

For  a  discussion  of  former  analagous  statutes,  see  Sayle  v.  Savings  & 
Loan  Co.  2  O.  C.  C.  (N.  S.)  401,  15  O.  C.  D.  503  [affirmed  without  report. 
Savings  &  Loan  Co.  v.  Sayle,  72  O.  S.  (639)];  Loan  &  Building  Co.  v. 
Kuehnert,    7    O.    N.    P.    204.    6    O.    D.    (N.    P.)    502. 

A  similar  statute  was  held  not  to  grant  banking  powers  within  the  mean- 
ing of  Article  XIII,  Sec.  7,  of  the  Ohio  constitution:  Bates  v.  Savings  & 
I^an  Association,  42  O.  S.  655  (following  Dearborn  v.  Savings  Bank,  42 
O.   S.   617). 

The  act  of  February  21,  1867.  authorizing  building  associations  to  become 
incorporated,  as  provided  in  certain  sections  of  the  "'act  to  provide  for  the 
creation  and  regulation  of  incor|>oratcd  companies,  passed  May  1,  1853."  has 
reference  to  the  sections  named  which  were  then  in  force,  and  not  the 
original  sections  which  had  been  repealed:  Land  &  Building  Association  v. 
Gallagher,  25  O.  S.  208. 

[448] 


LAWS  OF  OHIO. 

An  executory  contract  Ivetween  a  building  association,  incorporated  under 
the  act  of  May  9.  IhCS.  (S.  &  S.  194),  and  one  of  its  members  in  respect 
to  shares,  the  maximum  number  which,  under  the  statute,  a  member  may 
hold  in  his  own  right,  is  ultra  vires  and  cannot  be  enforced  by  action:  Simp- 
son   V.    Building   &    Savings    Association,    38   O.    S.    349. 

The  members  of  a  building  and  loan  association  have  a  mutual  interest 
in  their  affairs,  whether  they  are  borrowers  or  not:  Eversmann  v.  Schmitt, 
53   O.    S.    174.  .  ,  ^         „. 

Building  and  loan  associations  are  corporations  for  profit:  Hinman  v. 
Ryan.   3    O.    C.    C.    529.    2    O.    C.    D.    305. 

The  dues  payable  to  a  building  and  loan  association  are  analagous  to  the 
installments  of  stock  subscriptions:  Hinman  v.  Ryan,  3  O.  C.  C.  529,  2 
O.  C.  C.   305.  ^     .         ,        . 

If  the  building  and  loan  association  becomes  insolvent  and  is  placed 
in  the  hands  of  a  receiver  the  only  dues  which  are  to  be  paid  are  the 
assessments  which  are  ordered  by  the  company  in  order  to  equalize  the  claims 
of  the  members  among  themselves  and  to  pay  the  debts  of  the  association: 
Hinman   v.   Ryan,   3    O.   C.    C.   .")29,   2   O.    C.    D.    30.'.. 

That  a  manufacturing  corporation  may  become  a  borrowing  member  of 
a  building  and  loan  association,  see  Bank  Co.  v.  Spinning  &  Stamping  Co. 
14  O.  C.  C.  I,  7  O.  C.  D.  275  (affirmed  Bank  v.  Spinning  &  Stamping  Co., 
60  O.   S.   603). 

An  allegation  in  a  petition  that  a  corporation  did  certain  acts  which  only 
a  building  and  loan  association  could  lawfully  do  is  equivalent  to  an  allega- 
tion that  such  corporation  is  a  building  and  loan  association:  Carmichael  v. 
Savings  &  Loan  Company,  15   O.   D.    (N.    P.)    341. 

For  a  decision  under  a  former  statute  which  provided  for  rebating  the 
interest  as  the  dues  were  paid  in,  see  Seibel  v.  Building  Association,  43 
O.   S.    371.  ,  .  ^    ^    .,^. 

For  other  decisions  under  former  statutes  on  the  subject  of  building 
and  loan  associations,  see  Building  Association  v.  Vogeler,  7  O.  N.  P.  605, 
6   O.   D.    (N.    P.)    581;    Eversmann   v.    Schmitt.    11    Dec.    Rep.    9,    24   Bull.    56. 

Name. 

.Sec.  9644.  The  name  of  every  such  corporation  hereafter  organ- 
ized, or  heretofore  organized  and  hereafter  changing  its  name,  shall 
begin  with  any  word  it  may  select,  and  end  with  the  word  "company" 
or  with  the  word  "association."  It  also  shall  use  its  name  in  any 
order  it  designates,  and  if  it  so  desires,  with  other  words  not  for- 
bidden by  law,  any  one  or  more  of  the  following  words,  or  com- 
bination of  words,  at  its  option:  "Savings,"  "building,"  "loan," 
"savings  and  loan,"  or  "building  and  loan."  But  such  association 
shall  not  use  the  words  "bank,"  "banking"  or  "trust,"  nor  any  one 
or  more  of  them  in  combination.     (99  v.  528-2.) 

Prior  to  this  statute  a  building  and  loan  association  might  call  itself  a 
"loan   and   tru.it    company."      ("ramer    v.    Trust    Co.,    72   O.    S.    395. 

When  business  may  be  commenced. 

Sec.  9645.  The  capital  stock  named  in  the  articles  of  incorpora- 
tion shall  be  deemed  to  refer  to  the  authorized  capital.  The  organ- 
ization may  be  completed  and  business  commenced  when  five  per 
cent  thereof  is  subscribed,  and  the  names  and  addresses  of  its 
officers  and  not  less  than  two  copies  of  its  constitution  and  by-laws 
have  been  filed  with  the  inspector  of  building  and  loan  associa- 
tions.    (99  V.  528-3.) 

14491 


APPENDIX. 

In  organizing  a  building  association  under  the  act  of  February  21,  1867, 
{64  O.  L.  18),  the  certificate  of  incorporation  was  by  mistake  acknowlcdijcd 
before  a  notary  public,  instead  of  being  acknowledged  before  a  justice  of 
the  peace  as  tlicn  required.  In  proceeilings  instituted  under  the  act  of  March 
10,  1S.')9,  (S.  &  t".  1172),  the  mistake  was  subsequently  corrected, — it  was  held 
that  the  effect  of  the  correction  was  to  make  the  association  a  corporation  de 
jure  from  the  date  of  its  organization,  not  only  as  against  jiersons  <lealing 
directly  with  the  association,  but  as  against  all  others:  Spinning  v.  Building 
&    Savings    Association,    26    O.    S.    483. 

One  who  has  subscribed  for  stock  in  a  savings  and  loan  company  can 
not  avoid  liability  upon  his  subscription  therefor  in  an  action  brought  by 
creditors  of  the  company  to  collect  the  unpaid  subscriptions  and  to  enforce 
the  secondary  liability  of  the  stockholders  by  showing  that  the  company  had 
commenced  before  the  amount  of  stock  required  by  statute  had  been  sub- 
scribed; nor  can  he  avoid  liabilitv  by  showing  that  no  notice  was  given  of 
the  meetinv:  of  stockholders  to  elect  directors;  or  by  showing  that  a  bare 
majority  of  the  direttois  elected  at  an  irregular  meeting  hail  qualified  as 
such:      Dickason   v.    Bank   Co..   6   O.   C.   C.    (N.   S.)    329,    17    O.    C.    D.   357. 

Directors,  term  of  o0ice. 

Sec.  91)46.  Directors  may  be  elected  for  any  term,  not  less  than 
one  year  nor  longer  than  three  years.  If  such  term  be  longer  than 
one  year,  it  shall  be  so  arranged  that  as  nearly  as  may  be,  the  term 
of  office  of  an  equal  number  of  directors  will  expire  each  year.  (99 
V.  528-4.) 

The  directors  of  a  building  and  loan  jissociation  have  no  powc;-  to  .'ilter 
the  contract  between  the  association  and  a  borrowing  member,  without  the 
consent  of  the  latter:  Betz  v.  Building  Association,  1  O.  N.  P.  42,  1  O. 
D.    (N.  P.)   58. 

That  an  association  may  appoint  an  attorney,  see  Loan  &  Building  Co. 
V.    Kuehnert,    7    O.    N.    P.    264,   6    O.    D.    (N.    P.)    502. 

Whether  the  directors  of  an  association  may  take  advantage  of  facts 
which  they  have  learned  as  such  directors  and  withdraw  their  individual  de- 
posits without  communicating  their  knowledge  to  the  stockholders  at  large  was 
discussed  but  not  decided  in  Building  and  Savings  Co.  v.  Rehn,  6  O.  N.  P. 
185,    8    O.    D.    (N.    P.)    594. 

If  a  director  of  a  building  association  receives  deposits  from  members  of 
the  association  who  are  also  his  own  employes,  and  has  been  given  no  authority 
by  the  building  association  to  receive  such  deposits,  he  acts  as  the  agent  of 
the  members  in  so  doing,  and  not  as  agent  of  the  building  association:  Hassel- 
meyer    v.    Loan    &    Building    Co.,   8    O.    N.    P.    195,    10    O.    D.    (N.    P.)    570. 

A  building  and  loan  association  has  not  the  power  to  refuse  to  loan  its 
funds  to  its  members,  nor  to  establish  such  rules  and  regulations,  or  so 
conduct  its  business  as  to  prevent  the  loan  of  its  funds  to  a  member  who 
bids  the  highest  premium  therefor;  nor  to  borrow  money  for  the  purpose  of 
lending  it;  nor  to  divide  or  distribute  its  funds  amon,^  its  members  in  ad- 
vance of  the  distribution  at  the  winding  up  of  the  corpi.ration ;  nor  to  traffic 
in  shares  of  its  own  stock.  Such  corporations,  acting  in  good  faith  and  rea- 
sonably, may  compromise  with  a  member  and  release  him  from  further  obli- 
gation to  the  corporation,  whether  the  indebtedness  be  for  a  loan  or  on  sub- 
scription:     State    v.    Building   Association,   3.')    O.    S.    2.58. 

Where  a  corporation  bad  abused  or  misused  its  corporate  powers,  but  not 
in  any  particular  as  to  which  it  is  declared  by  statute  the  act  shall  operate 
as  a  forfeiture  of  its  charter,  the  court  is  vested  with  a  discretion  tc>  de- 
termine whether  the  corporation  shall  be  ousted  of  its  franchise  to  be  a  cor- 
poration, or  from  the  exercise  of  the  powers  illegally  assumed:  ^tate  v.  Build- 
ing  Association,   35   O.    S.    258. 

Powers. 

Sec.  9G47.  Such  corporation  shall  have  all  the  powers  set  forth 
in  the  following  sections  of  this  chapter.     (99  v.  528-5.) 

[450] 


LAWS  OF  OHIO. 

Receiving  of  deposits;  joint  accounts. 

Sec.  9648.  To  receive  money  on  deposits,  and  all  persons,  firms, 
corporations  and  courts,  their  agents,  officers  and  appointees  may 
make  such  deposits  and  stock  deposits,  but  such  corporation  shall 
not  pay  interest  thereon  e.xceeding  the  legal  rate.  When  such  de- 
posits or  stock  deposits  are  made  to  the  joint  account  of  two  or  more 
persons,  whether  adults  or  minors,  with  a  joint  order  to  the  cor- 
poration that  such  deposits  or  any  part  thereof  are  to  be  payable  on 
the  order  of  any  one  or  more  of  such  joint  depositors,  and  to  continue 
to  be  so  payable  notwithstanding  the  death  or  incapacity  of  one  or 
more  of  the  persons  making  them,  such  account  shall  be  payable  to  any 
one  or  more  of  such  survivors  or  survivor  or  order  notwithstanding 
such  death  or  incapacity.  No  recovery  shall  be  had  against  such 
corporation  for  amounts  so  paid  and  charged  to  such  account. 
(99  V.  528-6.) 

Issue  of  stock;  vote. 

Sec.  9649.  To  issue  stock  to  m.embers  on  such  terms  and  con- 
ditions as  the  constitution  and  by-laws  provide.  Each  member  may 
vote  his  stock  in  whole  or  fractional  shares,  as  the  constitution  and 
by-laws  provide,  but  no  person  shall  vote  more  than  twenty  shares 
in  any  such  corporation  in  his  own  right,  nor  have  the  right  to 
cumulate  his  votes.  But  every  subscriber  for  stock  in  accordance 
with  the  constitution  of  the  association,  may  vote  the  amount  of 
stock  so  subscribed  for,  in  no  event  to  exceed  twenty  shares. 
(99  V.  529-7.) 

Each  association  should  provide  itself  wth  a  carl-crate  seal  as  directed 
fcv  the  Qcncral  sta'.::tes  of  the  state,  and  all  stork  isrucd  by  the  association 
t'n  addition  to  having  the  signatures  of  the  prestdcnt  and  secretary  atnxed 
should  bear  the  xmprcss  of  such  seal.      (Ruling  of  the  Department.) 

For  a  discussion  cf  an  ana'.aR  jus  statute,  see  Savings  Bank  v.  Spinning 
&   Stamping  Co..   6   O.    D.    (N.    P.)    '-0.  ■.■•,, 

The  fact  that  a  member  .  f  a  buikiing  and  loan  association  nolds  a  grc.-iter 
number  of  shares  than  is  allowed  by  its  by-laws,  but  not  a  greater  number 
of  shares  than  allowed  by  its  statutes,  is  not  a  defense  asainst  a  claim  winch 
the  buildini?  and  loan  association  m:iy  have  against  him  o:i  aoc  .i:nt  ot  sucU 
shares:    Ha'crman    v.    Duilding    &    Savings    Association,    2.''>    O.    S.    18G. 

Where  a  loan  is  advanced  to  a  member  upon  his  stock,  it  is  witnin  tlie 
capacity  of  the  corporation  to  take  security  from  such  member  by  mortgage 
or  otherwise  for  the  payment  of  fines,  as  well  as  stated  dues  which  may 
be  lawfully  assessed  on  account  of  such  stock.  The  payment  of  state'i  dues 
and  fines  cannot  be  resisted  by  a  member  on  the  uround  that  the  by-laws 
of  the  association  have  not  been  adopted  by  a  vote  of  the  directors,  where 
It  appears  that  tlicy  have  been  recorded,  acted  upon  and  enforced  as  tlie  Dy- 
laws  of  the  association:  Hagcrniann  v.  Building  &  Savings  Association,  ^o 
O.    S.    IHfi.  ,      ,       .       I     ,  r 

A  building  and  loan  association  may  provide  by  its  by  laws  for  assessing 
and  collecting  reasonable  fines  from  members  of  the  association  for  default  in 
dues,  but  it  cannot  assess  or  collect  more  than  one  fine  for  noii  payment  ot  the 
Bam«  Slated  due.  and  it  cannot  impose  a  fine  for  default  in  paying  interest: 
iiagerman  v.  Building  &  Savings  Association,  26  O.   S.  180. 


APPENDIX. 

An  executory  contract  biHwcen  a  building  association  and  one  of  its  mem- 
bers in  respect  to  shares  claimed  by  him  in  his  own  right  and  in  excess  of 
twenty  shares,  the  maximum  number  whicli,  under  the  statute,  a  member  may 
hold  in  his  own  right,  is  ultra  vires  and  c.-in  not  be  enforced  by  action: 
Simiison    V.    Building    &    Savings    Association.    «S    ().    S.    34i>. 

A  stockholder  who  has  suliscribed  for  more  than  the  twenty  shares  allowed 
by  statute  is  estopped  to  deny  the  validity  of  such  shares:  Building  Association 
V.    Bund,    6    Dec.    Rep.    IIOS,    10    Am.    L.    Kec.    4Su,    ti    Bull.    823. 


Assessments. 

Sec".  9(i50.  To  assess  and  collect  from  inembers  and  others, 
such  dues,  fines,  interest  and  premium  on  loans  made,  or  other 
assessments,  as  may  be  provided  for  in  the  constitution  and  by-laws. 
Such  dues,  fines,  premium  or  other  assessments  shall  not  be  deemed 
usury,  although  in  excess  of  the  legal  rate  of  interest.  (99  v. 
529-8.) 

1.  Members.  V.  Excess  over  legal  rate  of  interest. 

II.  Dues.  VI.  Payments. 

III.  Fines.  VII.  Receivership. 

IV.  Interest   and  premium. 

I.        MEMBERS. 

The  members  of  a  building  association,  whether  borrowers  or  non-bor- 
rowers, have  a  mutual  interest  in  its  affairs;  and,  sharing  alike  in  its  earnings, 
must   assist  alike   in   bearing  its    losses:      Eversmann   v.    Schmitt,    63   O.    S.    174. 

A  borrowing  member  is  one  who  receives  in  advance  the  par  value  of 
his  shares,  and  agrees  in  consideration  of  such  advance  to  pay  the  weekly 
dues  of  the  shares  and  the  interest  on  the  loan  until  the  dues  paid  and  the 
dividend  declares  and  not  paid  are  equal  to  the  par  value  of  his  shares.  lie 
then  ceases  to  be  a  member  and  is  entitled  to  a  cancellation  of  the  mort- 
gage given  to  secure  the  obligations  arising  from  the  loan:  Eversmann  v. 
Schmitt,   53   O.    S.    1T4. 

A  person  who  applies  to  a  building  and  loan  association  for  a  loan  of 
money,  and  deposits  therewith  a  sum  of  money,  however  small,  for  the  pur- 
pose of  making  himself  eligible  as  a  borrower,  and  thereby  receives  a  loan, 
is  estopped,  when  sued  for  the  money  by  the  association,  from  denying  that 
he  was,  in  fact,  a  depositor  of  the  association:  Bates  v.  Peoples  Assn.,  42 
O.   S.   6f.4. 

The  fact  that  the  depositor  deposits  only  twenty-five  dollars  before  he 
borrows  money  on  n'-ortgage  and  that  he  draws  it  out  the  day  after  he  receives 
his  mortgage,  does  not  render  the  mortgage  invalid:  Lockwood  v.  Robbins, 
4    Dec.    Rep.    192,    1    Cleve.    L.    Rep.    101. 

Apparently  a  manufacturing  corporation  may  become  a  member  of  a  build- 
ing and  loan  company;  but  in  any  event  having  borrowed  money  from  the 
association,  and  having  received  the  benefits  of  the  loan,  its  property  will 
be  subject   to   the   lien   of  the  mortgage  given   to  secure   such   loan:     Bank   Co. 

V.  Spinning  &   Stamping  Company,    14    O.   C.    C.    1,   7   O.   ('.    D.    275    [on   appeal 
from    Bank   v.    Spinning   &   Stamping   Co.,   6   O.    D.    (N.    P.)    70]. 

There  is  a  wide  difference  in  the  principles  which  govern  the  dealings  of 
third  persons  with  a  corporation  and  those  which  control  dealings  between  a 
corporation  and  its  depositors,  who  are  also  its  stockholders  and  who  are  fa- 
miliar with  the  limitations  imposed  by  its  constitution  upon  the  powers  of 
its  agents:  Sachs  v.  Building  &  Loan  Assn.,  4  O.  N.  P.  214,  6  O.  D.  (N. 
P.)    254. 

The  rules  which  govern  the  dealing  between  a  depositor  in  a  building 
association,  and  who  is  familiar  with  the  limitations  imposed  by  the  constitu- 
tion upon  its  officers,  are  different  from  the  rules  which  govern  the  dealings 
between  third  person  and  officers  of  corporations  when  such  third  persons  are 
not  aware  of  any  restrictions  upon  the  apparent  powers  of  such  officers:  Sachs 
V.  Building  &  Loan  A.ssn  ,  4  O.  N.  P.  214.  6  O.  D.  (N.  P.)  254;  see,  also, 
Mueller   v.    Cohen,   11.    Dec.    Rep.    575,   27    Bull.    353. 

14521 


LAWS  OF  OHIO. 

One  who  is  not  a  member  of  an  association  and  who  has  tiot  subscribed 
for  shares  in  an  association,  does  not  become  a  member  by  making  a  general 
deposit:  and  such  depositor  is  not  liable  to  pay  dues  or  fines,  nor  can  he  par- 
ticipate in  the  dividends;  Turner  Bauvercin  v.  Woodburn,  11  Dec.  Rep.  578, 
27   Bull.    409.  ,       ,  u     u 

One  who  is  not  a  stockholder,  but  who  has  made  deposits  with  the  asso- 
ciation, is  a  creditor  of  the  association  to  the  extent  of  such  deposits:  Ash- 
brook  V.  Building  &  Saving  Co.,  8  O.  N.   P.   246,   11   O.   D.    (N.   1'.)    360. 

II.        DUES. 

The  payment  of  stated  dues  and  fines  can  not  be  resisted  by  a  member 
on  the  ground  that  the  by-Iasvs  of  the  association  have  not  been  adopted  by 
a  vote  of  the  directors,  where  it  appears  that  they  have  been  recorded,  acted 
upon,  and  enforced  as  the  by-laws  of  the  association:  Hagermann  v.  Building 
Assn.,   25  O.    S.    186. 

After  breach  of  the  condition  of  a  mortgage  given  to  secure  the  payment 
of  stated  dues,  interest  on  loans  advanced  and  fines,  the  decree  in  an  action 
to  foreclose  should  be  confined  to  the  amount  of  such  dues,  interest  and  fines 
then   due  and   unpaid:      Hagermann    v.    Building   Assn.,   25   O.    S.    186. 

Payment  of  dues  upon  stock  in  a  building  and  loan  association  corresponds 
to  payment  of  installments  upon  stock  subscriptions  in  other  corporations  for 
profit:      Hinman    v.    Ryan,   3    O.    C.    C.     529,   2    O.    C.    D.    305. 

If  an  association  becomes  insolvent,  and,  by  common  agreement,  the  mem- 
bers cease  to  pay  their  dues,  a  borrowing  member  who  fails  to  pay  his  dues 
is  not  thereby  in  default:  Hinman  v.  Ryan  3  O.  C.  C.  529,  2  O.  C.  D    305. 

Not  more  than  one  fine  can  be  assessed  with  reference  to  default  in  the 
same  installment  of  stated  dues:     Building  Assn.   v.   Gallagher.   25   O.   S.  208. 

The  advancing  of  money  by  a  building  and  loan  association  to  its  mem- 
bers is  not  the  exercise  of  banking  power:  Building  Assn.  v.  Gallagher,  25 
O.   S.  20S.  .  .  , 

A  building  and  loan  association  has  power  to  compromise  with  a  member 
and  release  him  from  further  obligation  to  the  corporation,  whether^  the  in- 
debtedness arose  from  a  loan  or  on  a  subscription  for  stock.  And  where  the 
parties  to  the  compromise  have  acted  in  good  faith,  the  transaction  will  not 
be  rescinded  because  the  released  member  was  paid  a  greater  sum  of  money 
than  he  would  have  received  uixin  a  pro  rata  distribution  of  the  assets  of  the 
concern:  Wangerien  v.  Aspell,  47  O.  S.  250;  see,  to  the  same  effect^  State  v. 
Loan  Assn.,  35  O.  S.  25S;  Building  &  Loan  Co.  v.  Richter,  16  O.  C.  C.  191, 
9  O.   (  .   D.  74. 

On  the  question  of  dues,  see  also.  Turner  Bauverein  v.  Woodburn.  11 
Dec.    Rep.   578.   27    Bull.    409. 

III.        FINES. 

Fines  can  not  be  imposed  for  default  in  the  payment  of  interest  on  loans, 
nor  can  more  than  one  fine  be  assessed  in  respect  to  the  same  installment  of 
stated  dues:  Land  &  Building  Association  v.  Gallagher,  25  O.  S.  20S;  see, 
to  the  same  effect,   Hagerman   v.   Building  &   Savings  Association,  25  O.   .S.    186. 

Fines  may  be  assessed  and  collected  only  from  members  of  the  corporation; 
but  there  is  no  limit  as  to  the  amount  or  occasion  except  as  prescribed  in  the 
by-laws  of  the  corporation,  and  there  is  no  express  limitation  on  the  power 
of  the  corporation  to  adopt  by-laws.  That  there  are  limits,  however,  beyond 
which  the  corporation,  by  its  bylaws,  can  not  go,  is  undoubted.  1.  The 
amount  of  the  fine  must  be  reasonable.  2.  It  can  be  imposed  only  by  way 
of  punishment  for  some  delinquency  in  the  performance  of  a  duty  which  the 
members  may  owe  to  the  corporation  by  re.ison  of  his  membership.  3.  It 
is  unrca.ionable,  and  therefore  we  may  assume  that  the  legislature  did  not 
intend  that  more  than  one  fine  .should  be  imposed  for  the  same  delinquency; 
ilagerman    v.    Building    &    Savings    Association,    25    O.    S.    186. 

The  filing  by  a  building  association,  mortgagee,  of  answer  and  cross-peti- 
tion in  a  proceeding  brought  by  an  assignee  fur  authority  to  sell  land,  is  not 
such  an  election  to  forfeit  the  stock  of  the  member  as  will  e.slop  the  asso- 
tion  from  claiming  fines  for  nonpayrnent  of  dues  accruing  after  the  a.ssign- 
ment:      Hutchinson    v.    Straub,    64    O.    .">.    413. 

If  the  mortgagor  makes  an  a«signnunt  for  the  benefit  of  his  creditors, 
finds  that  penaltie*  are  to  be  computed  to  the  time  that  the  mortgage  is  paid, 
and  not  merely  to  the  date  of  the  assignment:  Hutchinson  v.  Str.iub.  16  O. 
C.    C.    452,   9    O.    (  .    D.    171    faffirmed    Hutchinson    v.    Straub,    04    O     S.    413.) 

if  a  mortgage  contains  a  provision  that  the  mortgagor  shall  pay  thirty 
dollars  aa  an  attorney's  fee  in  case  of  foreclosure,  such  fee  shall  not  be  col- 
lected from  a  mortgagor  who  is  not  in  default,  the  building  and  loan  asso- 
ciation having  incurred  expenses  in  asserting  an  invalid  claim:  Kesting  v. 
Donahue.    13    O.    C.    C.    C53.    6    O.    C.    D.    262. 


APPENDIX. 

On  li<iuivlation  of  a  building  and  loan  association,  the  obliRation  to  pay 
(lufs  coasfs,  as  well  in  the  case  of  borrowinR  members  as  in  the  case  of  non- 
borrowing  members:  Building  Association  v.  FitzRcrald,  8  O.  N.  I".  160,  11 
O.    D.    (N.    V^    IS.-!. 

I'lion  a  decree  for  -ale  the  liability  of  a  member  for  issuing  fines  ceases, 
since  he  is  then  liable  for  interest  on  the  amount  of  the  decree:  Windish  v. 
Korman.  S  Dec.  Kep.  00.  f)  Bull.  S64  (rule  in  Building  Association  v.  Flack, 
1    C.    S.    C.    R.    46.S.    not    followed.] 

IV.        INTEKEST     AND     PRE.MIU.M. 

Interest  can  not  be  charged  upon  the  premium:  Building  Association  v. 
Gallagher,  25  O.   S.   208;    Risk   v.   Building   Association,   31    O.    S.    617. 

Under  a  former  statute  a  premium  was  usurious  if  it  were  not  fixed  by 
competitive  bidding  and  if  it  brought  the  total  interest  above  the  maximum 
rate  allowed   by   law:     Bates  v.    Peoples  Association    42   O.    S.   CfiH. 

Under  a  former  statute  a  minimum  rate  for  the  premium  could  not  be 
fixed,  but  the  premium  had  to  be  determined  by  competitive  bidding:  State  v. 
Building  Association,  29  O.   S.   92;   State  v.   Building  Association,  35  O.  S.  258. 

Under  former  statutes  a  building  and  loan  association  could  charge  legal 
interest,  together  with  the  premium  for  the  loan  as  fixed  by  competition:  Bates 
V.  Savings  Association,  42  O.  S.,  fij.T;  State  v.  Building  &  Savings  Associa- 
tion,   29    O.    S.    92;    Savings   &    Loan    Association    v.    Roberts,    5    O.    N.    P.    86, 

5  O.    D.    (N.    F.)    4S'.». 

Any   amount  fixed  by   competitive   bidding  may   be   chprged   as   a   premium: 
Savings  &  Loan  Association  v.   Roberts.  5  O.   N.   P.  86,  5  O.   D.    (N.   P.)    489. 
The    association    alone   has    the   right    to    determine   the    premium:      Savings 

6  Loan   Association   v.    Roberts.    5   O.    N.    P.    86.    5    O.    D.    (N.    P.)    48!). 

If  the  society  goes  into  liquidation,  the  duty  to  pay  the  premium  ceases: 
Building    Association    v.    Fitzgerald,    S    O.    N.    1'.    IGO,    11    O.    D.    (N.    P.)    133. 

The  building  and  loan  association  can  not  increase  the  amount  of  the 
weekly  installments  of  premiums  to  he  paid  on  mortgages  already  in  force 
unless  the  constitution  and  by-laws  of  such  association  clearly  reserve  such 
right:  Burke  v.  Building  Association,  8  Dec.  Rep.  341.  7  Bull.  114;  sec, 
also.   Building  Association    v.    Boning,   6   Dec.    Rep.    1149,   10   Am.    L.    Rec.    626, 

7  Bull.    174.  _      .  - 

A  premium  for  a  loan  can  not  be  collected  after  its  maturity:  Savings  & 
Loan    Association   v.    Steven,   7    Dec.    Rep.    435,   3    Bull.    113. 

Revised  Statutes  Section  S835  contained  a  provision  that  a  buil.iing  asso- 
ciation, at  the  end  of  each  year,  "shall  make  a  rebate  of  interest  on  the 
amount  of  dues  paid  on  loans  awarded,"  and  it  thereby  provided  that  the  in- 
terest-bearing power  of  such  loans  should  be  reduced  year  by  year  a.s  dues 
are  paid  in  on  the  shares,  and  that  the  interest  payable  on  such  loans  shall 
be  less  year  by  year  as  such  dues  are  paid  in:  .Seibel  v.  Building  As-sucia- 
ti(;n.   43   O.    S.    o7T. 

V.        EXCE.-;s     OVER     LEC.\L     K.\TE     OF     INTEREST. 

Statutes  which  exempt  building  and  loan  associations^  from  the  operating 
of  the  general  usury  laws  are  constitutional  and  valid:  Cramer  v.  Trust  Co., 
72  O.  S.  :i05;  Spies  v.  Loan  &  Trust  Co.,  4  O.  C.  C.  (N.  S.)  103,  14  O.  C. 
D.  40;  Building  &  Loan  Assn.,  v.  Desnoyers,  4  O.  C.  C.  (N.  S.)  337.  16 
O.  C.  D.  3.-)2;  Carmichael  v.  Savings  &  Loan  Co.,  15  O.  D.  (N.  P.)  341; 
Building  &  Loan  Association  v.  Desnoycrs,  4  O.  C.  C.  (N.  S.)  337;  16  O.  C. 
D.  352;  Building  Association  v.  Boning,  6  Dec.  Rep.  1149.  10  Am.  L  Rec. 
626,  7  Bull,  174.  t'ontra:  Mykrantz  v.  Building  &  Loan  Co.,  19  O.  C-.  C. 
51,    10    O.    C.    D.    250,    42    Bull.    :JK'). 

Charges  in  the  form  of  premiums  made  in  compliance  with  the  bunding 
and  loan  statute  do  not  amount  to  usury,  although  the  amount  of  such  pre- 
miums, together  with  the  amount  of  interest  charged,  is  in  excess  of  the  legal 
rate:  Lucas  v.  Building  Association,  22  O.  S.  339;  Cramer  v.  Loan  &  Trust 
Co.,  72  O.  S.  395;  Savings  &  Loan  Assn.,  v.  Roberts,  5  O.  N.  P.  86,  5  O. 
D.    (N.   P.)   489. 

VI.        PAYMENTS. 

A  borrowing  member  who  claims  that  a  loan  has  been  paid  has  the  burden 
of  proving  such  payment:  Sachs  v.  Building  &  Loan  Assn.,  4  O.  N.  P.  214, 
6  O.  D.   (N.  P.)  254.  ^  . 

A  shareholder  is  not  entitled  to  credit  for  payments  except  those  ™aue 
in  cash  at  the  usual  place  of  business  of  the  association  and  at  the  hour  fixed 
by  the  by  laws  for  the  receipt  of  dues:  Sachs  v.  Building  &  Loan  Assn.,  4 
O.  N.  P.  214,  6  O.  D.  (N.  P.)  254. 

[4541 


LAWS  OF  OHIO. 

If  the  constitution  of  the  buildinf?  association  provides  for  payment  in 
legal  tender,  payment  by  check  is  not  a  valid  payment  if  the  secretary  converts 
the  proceeds  of  such  check  to  his  own  use.  The  fact  that  the  directors  have 
received  checks  repeatedly  in  the  past  does  not  operate  as  an  estoppel:  Mueller 
V.   Cohen,   11    Dec.   Rep.   575,   27   Bull.   333. 

A  building  and  loan  association  has  power  to  compromise  with  a  member 
and  release  him  from  further  obligation  to  the  corporation,  whether  the  in- 
debtedness arose  from  a  loan  or  on  a  subscription  for  stock.  And  where  the 
parties  to  the  compromise  have  acted  in  good  faith,  the  transaction  will  not 
be  rescinded  because  the  released  member  was  paid  a  greater  sum  of  money 
than  he  would  have  received  upon  a  pro  rata  distribution  of  the  assets  of  the 
concern:    Wangerien  v.  Aspell,  47  O.  S.  250. 

VII.        RECEIVERSHIP. 

On  the  application  of  the  directors  of  a  building  association  who  claim 
no  individual  right  in  its  property,  the  company  has  no  power  to  place  the 
property  of  the  association  in  the  hands  of  a  receiver  without  notice  to  the 
members  of  the  association:  Schone  v.  Building  &  Saving  Comp.inv,  4  O. 
N.    P.   216,   6   O.    D.    (N.   P.)    246. 

Withdrawal  of  stock  deposits. 

Sec.  9651.  To  permit  members  to  withdraw  all  or  part  of  their 
stock  deposits,  at  such  times,  and  upon  such  terms  as  the  constitu- 
tion and  by-Laws  provide.  Any  member,  however,  who  withdraws 
his  entire  stock  deposit,  or  whose  stock  has  matured,  shall  be  en- 
titled to  receive  all  dues  paid  in  and  dividends  declared  thereon, 
less  all  fines  or  other  assessments,  and  less  the  pro  rata  share  of  all 
losses,  if  any  have  occurred.     (99  v.  529-9.) 

A  building  and  loan  association  has  no  power  to  withhold  from  a  .stock- 
holder money  which  was  due  him  under  the  terms  of  its  contract  on  the  ground 
that  it  fears  he  may  become  insolvent  in  the  future,  nor  may  it  set  up  a  coun- 
terclaim upon  such  facts:  Jungkuntz  v.  Building  Association,  8  Dec.  Rep. 
242,   6   Bull.    4CS. 

Withdrawal  of  deposits. 

Sec.  9fi52.  To  permit  withdrawal  of  deposits  upon  such  terms 
and  conditions  as  the  association  provides  except  by  check  or  draft. 
But  no  such  association  shall  be  permitted  to  carry  for  any  member 
or  depositor  any  demand,  commercial  or  checking  account.  Nothing 
in  this  chapter  shall  prevent  members  or  depositors  from  withdraw- 
ing funds  by  non-negotiable  orders.     (99  v.  529-9.) 

A  building  and  loan  association  has  power  to  compromise  with  a  member 
and  to  release  him  from  further  obligation  to  the  association,  whether  his 
indebtedness  arises  from  a  loan  or  upon  a  subscription  for  stock:  W'angericn 
V.  Aspell,  47  O.  S.  250;  to  the  same  effect,  see  Stale  v.  Building  Association, 
86  O.    .S.   258. 

If  a  building  and  loan  association  has  agreed  that  its  stock  shall  mature 
in  a  certain  specified  time,  such  agreement  can  not  be  enforced  spccilically 
if  the  failure  of  such  stock  to  mature  in  .such  time  was  not  the  fault  of  the 
company,  but  wa.s  due  to  financial  depression:  Demland  v.  Savings  &  Loan 
Co.,  20   O.   (  .   C.    223,    11    ().   (  .    D.   2Jy, 

Under  a  con.^titution  which  provides  that  members  can  withdraw  only  in 
the  order  in  which  they  filcil  their  applications  to  withdraw,  a  loan  association 
may  refuse  to  cancel  a  mortgage  on  tender  of  a  withdrawal  claim  which  is  not 
yet  due:  Ward  v.  Building  &  Savings  Co.,  6  O.  N.  P.  133,  8  O.  D.  (N. 
V.)   489. 

(-155] 


APPENDIX. 

Filing  notice  of  withdrawal  does  not  determinate  the  membership  of  the 
person  thus  tiling  it.      Building  Association   v.    Howell,   3i»   Bull.   38(1    (editorial). 

A  shareholder  in  the  dcf(.'ndant  l>uildini{  ast^ociation  made  a]>plication  for 
withdrawal,  and,  notwith.staiuliiiK  there  were  other  application.*  ahead  of  hers, 
and  that  the  association  was  without  funds  to  meet  these  applications,  a  war- 
rant was  issued  for  the  lull  amount  due  her,  and  a  loan  was  procured  from 
her  of  a  sum  equal  to  the  amount  of  the  warrant,  the  association  executing 
its  note  lor  the  loan  and  cancelinn  the  warrant.  It  was  held  that  the  action 
of  the  association  in  thus  satisfying  the  claim  of  such  shareholder  in  advance 
of  unsatisfied  prior  applications  for  withdrawal  was  not  ultra  vires,  for  the 
reason  that  it  was  in  violation  of  a  by-law  only,  and  not  of  the  fundamental 
powers  of  the  association,  and  that,  in  the  absence  of  proof  of  knowledge 
on  the  |>art  of  such  shareholder  of  her  agent,  that  she  was  being  paid  out  of 
order,  she  was  not  chargeable  with  constructive  knowledge  that  such  was  the 
fact:  I'ugh  v.  Building  Association,  1  O.  N.  V.  (N.  S.)  253,  14  O.  D. 
{N.    P.)    60. 

That  a  member  may  deposit  a  sinall  sum  of  money  on  one  day  and  may 
draw  it  out  the  next,  in  order  to  comply  with  the  rule  of  the  company  that 
only  depositors  can  borrow  money,  see  Lockwood  v.  Robbins,  4  Dec.  Rep.  192 
(1    Cleve.    L.    Rep.    101). 

A  member  of  a  building  and  loan  association  who  owns  shares  in  the 
name  of  others  may  withdraw  in  the  same  way  as  if  such  shares  were  in  his 
own  name;  and,  if  the  building  and  loan  association  refuses  to  make  such 
payment,  he  may  maintain  an  action  for  money  had  and  received:  Building 
Association   v.    Henderson,   .'j    Dec.   Rep.    581,   6   Am.    L.    Rec.   705. 

Cancellation, 

Sec.  9Go3.  To  cancel  shares  and  parts  of  shares  of  stock  upon 
which  the  credits  have  been  withdrawn,  or  upon  which  loans  have 
been  repaid,  and  re-issue  thetn  as  new  stock.     (99  v.  629-10.) 

Building  and  loan  associations  may  compromise  with  their  members:  .State 
V.   Building  Association,   35   O.    S.    258;    Wangerien   v.   Aspell,   47   O.    S.    2.50. 

A  compromise  which  is  made  in  good  faith  will  not  be  regarded  as  in- 
valid because  such  member  receives  a  larger  amount  that  he  would  have  re- 
ceived if  the  assets  of  the  association  had  been  distributed  pro  rata:  Wan- 
gerien   V.   Aspell,   47   O.   S.    2.')0. 

The  "value"  of  a  share  in  a  building  association  may  not  be  a  proper 
basis  for  distribution  of  earnings  due  such  share,  but  the  amount  of  dues  paid 
on  such  share  and  the  other  credits  to  the  share  make  such  a  basis,  whether 
or  not  a  loan  has  been  awarded  on  such  a  share:  Seibel  v.  Building  Asso- 
ciation, 43   O.   S.  371. 

A  former  statute  (R.  S.  Sec.  8835,  77  v.  208)  did  not  provide  for  the 
cancellation  of  parts  of  a  loan  as  year  by  year  dues  were  paid  in  on  shares, 
but  such  loan  was  to  be  settled,  with  such  dues  and  other  credits,  when  the 
share  was  fully  paid:  and  designating  the  ordinary  dues  as  "dues  paid  on 
loans  awarded"  did  not  change  their  nature  or  application:  Seibel  v.  Building 
Association,    43    O.    S.    371. 

A  former  statute  (R.  S.  Sec.  3835)  contained  the  provision  that  a  building 
association,  at  the  end  of  each  year,  "shall  make  a  rebate  of  interest  on  the 
amount  of  dues  paid  on  loans  awarded,"  and  it  thereby  provided  that  the  in- 
terest-bearing power  of  such  loans  should  be  reduced  year  by  year  as  dues 
were  paid  in  on  shares,  and  that  the  interest  payable  on  such  loans  should 
be  less  year  by  year  as  such  dues  were  paid  in:  Seibel  v.  Building  Associa- 
tion,  43   O.    S.    371. 

The  possibility  that  there  may  be  a  deficiency  to  which  a  retiring  mem- 
ber may  be  obliged  to  contribute  subsequently  does  not  justify  a  building  and 
loan  association  to  withhold  any  amount  due  to  such  a  member:  Jungkuntz 
v.   Building  Association,  8   Dec.   Rep.   242,  6  Bull.   428. 

An  agreement  that  a  retiring  member  may  withdraw  the  money  which  he 
has  paid  in,  with  interest  at  eight  per  cent,  is  valid:  Jungkuntz  v.  Building 
Association,   8   Dec.    Rep.   242,   C  Bull.    428. 

A  compromise  with  members  in  violation  of  the  provisions  of  the  con- 
stitution is  invalid:  McKeown  v.  Building  Association,  8  Dec.  Rep.  17,  5 
Bull.   52. 

A  building  and  loan  association  can  not  require  a  withdrawing  member 
to  pay  the  entire  amount  of  his  premium  as  a  condition  to  preparing  him  to 
withdraw:      Windhorst   v.  Building  Association,  8  Dec.   Rep.  286,  7  Bull.  89. 

[456] 


LAWS  OF  OHIO. 

Rules  as  to  minors. 

Sec.  9654.  To  issue  stock  to  minors  and  receive  deposits  thereon 
and  permit  both  stock  and  deposits  to  be  withdrawn,  transferred, 
pledged  and  voted  by  such  minors  as  other  stock  and  stock  deposits ; 
to  receive  deposits  of  money  by  or  for  minors  and  to  pay  them  to 
such  minors,  or  upon  their  order.  The  receipt  or  paid  order  of  such 
minor,  therefor,  shall  be  a  valid  acquittance  of  the  rights  of  all 
concerned.     (99  v.  529-11.) 

Property,  leasing,  holding  of. 

Sec.  9655.  To  lease,  acquire,  hold,  encumber,  convey  and  rent 
such  real  estate  and  personal  property  as  is  necessary  for  the  trans- 
action of  its  business,  or  necessary  to  enforce  or  protect  its  secur- 
ities.    (99  V.  529-12.) 

A  building  and  loan  association  may  compromise  with  its  members:  State 
V.   Building  Association,   85   O.   S.   25S;   Wangerien   v.   Aspell.   47    O.   S.   250. 

Borrowing  money. 

Sec.  9()5().  To  borrow  money,  not  exceeding  twenty  per  cent 
of  the  assets,  and  issue  its  evidence  of  indebtedness  or  other  security 
therefor.     (99  v.  530-13.) 

Loans. 

Sec.  9657.  To  make  loans  to  members  and  others  on  such  terms, 
conditions  and  securities  as  may  be  provided  by  the  association. 
(99  V.  530-14.) 

A  building  and  loan  association  cannot  loan  its  funds  without  other  or 
further  security  than  the  promissory  note  of  the  borrower,  no  matter  how 
many   signers   or   endorsers    there   may    be   to    the    note. 

(Ruling  of  the  Department ;  supplemented  by  opinion  of  the  Attorney 
General.) 

I.      (>oan    of    money    not    exercise    of     III.      Defenses. 

banking  power.  IV.      Effect    of    former   statutory   pro- 

II.      Mortgage.  visions. 

(a)  Power  to  take. 

(b)  .Special  covenants. 

(c)  Foreclosure. 

I.        LOAN     OP     MONKY     NOT     EXERCISE     OF     BANKING     POWER. 

.\  former  statute  in  some  respects  similar  to  those  now  in  force  which 
authorized  a  building  and  loan  association  to  receive  deposits,  was  held  to  be 
valid  and  conslitufional ;  and  not  a  statute  which  authorized  an  association 
with  banking  powers,  within  the  meaning  of  Article  XIII,  .Section  7.  of  the 
constitution   of   Ohio:      Hates   v.    Savings   &    Loan   Association,    42   O.    S.    0.).%. 

Loaning  money  to  the  members  of  a  building  and  loan  association  is  not 
engaging  in  b.inking:  Dearborn  v.  Bank.  42  O.  S.  617;  Building  Associ.ition 
V.   Gallagher,   25  O.   .S.   208. 

[■157] 


APPENDIX. 

II.        MORTGAGE. 

(a)  Power  to  take.  Where  a  loan  is  advanced  to  a  member  uiion  his 
stock,  it  is  within  the  capacity  of  the  corporation  to  take  srcurity  from  such 
member  by  niortgase  or  otherwise  for  the  payment  of  fines,  as  well  as  .-stated 
dues,  which  may  be  lawfully  assessed  on  account  of  such  stock:  Hagcrman 
V.    Building  Assoiation,   20   O.    S.    180. 

Such  corporation,  under  the  act  of  May  9,  1868,  (S.  &  S.  194),  may,  by 
its  bylaws,  assess  and  collect  a  reasonable  fine  from  a  member  of  the  asso- 
ciation for  default  in  the  payment  of  his  st.ited  due,  but  cannot  assess  or 
collect  more  than  one  fine  for  the  non-payment  of  the  same  stated  due;  and 
there  is  no  power  conferred  upon  tlie  coriwration  to  levy,  assess  or  collect 
a  fine  for  any  default  in  the  p.iyment  of  interest  on  loans  advanced:  Hager- 
man   v.    Building   Association,   25   O.    S.    186. 

A  mortgage  may  be  made  security  for  fines:  Hagcrman  v.  Building  Asso- 
ciation.  25   b.    S.    18C. 

(b)  Special  covenants.  A  covenant  is  a  mortgage  to  the  effect  that  the 
entire  loan  should  become  due  in  case  of  default  of  any  installment  was  in- 
valid if  the  premium  was  deducted  in  advance,  since  the  effect  of  fuch  pro- 
vision would  be  to  forfeit  the  entire  premium:  Hagcrman  v.  Building  Asso- 
ciation, 25   O.   S.    186. 

If  a  mortgage  contains  a  covenant  that,  upon  breach  of  condition,  the 
whole  amount  of  the  par  value  of  the  stock  should  become  due  and  that  the 
mortgage  may  be  foreclosed  as  security  therefor,  only  the  amount  of  the  fines 
and  interest  due  can  be  recovered:  Hagerman  v.  Building  As.-iociation,  25 
O.   S.   186. 

A  covenant  that,  in  case  of  default,  the  amount  to  be  due  is  to  be  ascer- 
tained by  taking  the  enti-.e  amount  of  the  loan  and  deducting  the  credits  which 
are  paid  in,  is  invalid,  since  the  borrowing  member  is  thus  deprived  of  his  in- 
terest in  the  association:  Building  Association  v.  Eggen,  8  Dec.  Rep.  114, 
5  Bull.   752. 

A  by-law  can  not  increase  an  installment  to  be  paid  upon  the  premium 
i:nder  prior  contract  unless  the  right  to  change  such  prior  contracts  has  been 
reserved  expressly:  Burke  v.  Buihiing  Association,  8  Dec.  Rep.  341,  7  Bull. 
114;  Association  v.  Boning,  6  Dec.  Rep.  1149,  10  Am.  L.  Rec.  626. 

If  a  covenant  for  the  payment  of  attorney's  fees  in  case  of  foreclosure  is 
invalid,   see   Building   Association   v.    McCaffcry,    12    O.    C.    D.    685. 

For  the  validity  of  a  provision  fixing  the  amount  due  in  case  of  fore- 
closure, see  Building  Association  v.  Leyden,  5  Dec.  Rep.  345,  4  Am.  L. 
Rec.    7<>5. 

(c)  Foreclosure.  After  breach  of  the  condition  of  a  mortgage  given  to 
secure  the  payment  of  stated  dues,  interest  on  loans  advanced  and  fines,  the 
decree  in  an  action  to  foreclose  should  be  conhned  to  the  amount  of  such 
dues  interest  and  fines,  then  due  and  unpaid:  Hagerman  v.  Building  Asso- 
ciation, 25   O.   S.   186. 

In  an  action  brought  by  a  building  association  against  a  member  on  a 
mortgage  given  to  secure  the  payment  of  weekly  dues  and  the  installments  of 
interest  on  an  advanced  loan,  the  taking  of  the  account,  preliminary  to  an 
order  of  sale,  should  be  limited  to  the  amount  of  dues  and  interest  that  haa 
accrued  at  the  time  of  rendering  the  decree:  Risk  v.  Building  Association, 
31  O.  .S.  517.  ,  .  •  t.    • 

In  demanding  the  amount  due  on  foreclosure,  the  dues,  together  with  in- 
terest and  fines,  should  be  computed  up  to  the  date  of  the  decree,  and  not 
merely  to  the  first  day  of  the  term:  Windish  v.  Korman,  8  Dec.  Kep.  60, 
5   Br.ll.    364. 

In  proceeding  to  foreclose  a  mortgage  given  to  a  building  and  loan  asso- 
ciation, an  answer  which  alleges  that  the  a.ssociation  owres  to  the  defendant 
more  than  the  par  value  of  his  stock  is  sufficient:  Building  Association  v. 
Tenney,   7    O.    N.    P.    130   8    O.    D.    (N.    P.)    391. 

Under  a  covenant  to  pay  the  attorney's  fee  in  case  of  foreclosure,  the  at- 
torney's fee  cannot  be  recovered  if  the  mortgage  debt  is  not  due  of  in  default, 
and  if  the  building  and  loan  association  has  incurred  expenses  in  asserting 
an   unfounded   claim:      Resting  v.    Donahue,   13   O.    C.    C.    6i>3,   6   O.   C.   U.   lUi. 

Any  amount  which  a  building  and  loan  association  is  required  to  pay 
as  attorney's  fees  in  foreclosure  proceedings  should  be  paid  out  of  the  earn- 
ings as  all  ordinary  e.rpenses  incurred  by  the  association  are  paid,  and  should 
not  be  charged  against  the  reserve  fund. 

(Ruling  of  the  Department,  supplemented  by  opinion  of  the  Attorney 
General.) 

[458] 


LAWS  OF  OHIO. 


III.        DEFENSES. 

For  the  determination  of  the  amount  due  upon  a  building  and  loan  asso- 
ciation mortgage  and  for  distribution,  see,  also,  Building  Association  v.  Mueller, 
8  Dec.  Rep.  469,  8  Bull.  97;  Building  Association  v.  O'Connor,  6  Dec.  Rep. 
1012,    9    Am.    L.    Rec.    4ii6,    5    Bull.    S53. 

One  who  has  borrowed  money  from  a  building  and  loan  association  cannot 
set  up  as  a  defense  of  a  suit  in  foreclosure  the  fact  that  the  articles  of  incor- 
poration were  not  acknowledged  before  an  officer  authorized  by  statute  to  take 
such  acknowledgment:     Lucaji  v.  Building  Association,  22  O.   S.  339. 

The  fact  that  a  member  of  such  corporation  holds  a  greater  number  of 
shares  than  is  allowed  by  its  by-laws,  but  not  in  excess  of  the  number  limited 
by  the  statute,  is  no  defense  against  any  claim  which  the  corporation  may  have 
against  him  on  account  of  such  shares:  Hagerman  v.  Building  Association, 
25   O.   S.   186.  .      ^  .        ^  .         u-  t. 

Building  corporations  are  not  required  to  ascertain  the  use  to  which  a 
member  who  obtains  a  loan  on  his  stock  intends  to  apply  the  money:  Hager- 
man   V.    Building   Association,    25    O.    S.    ISO. 

Such  corporation  is  not  authorized  to  use  its  funds  in  making  loans  to 
members  or  depositors  upon  their  promissory  notes,  at  a  rate  greater  than  the 
legal  rate  of  interest,  in  addition  to  the  premium  bid  for  the  right  of  pre- 
cedence, or  in  purchasing  or  discounting  notes  from  such  members  or  de- 
positors at  usurious  rates  of  interest,  or  to  use  its  fnnds  in  loaning  the  same 
to  and  in  purchasing  and  discounting  notes  from  persons  other  than  its  mem- 
bers or  depositors  upon  any  terms:  State  ex  rel.,  v.  Building  Association, 
29  O.   S.  92. 

A  member  who.  with  full  knowledge  of  the  facts  of  his  contract  with  the 
building  and  loan  association,  under  a  rule  for  which  there  is  no  longer  legal 
authority,  is  estopped  from  denying  the  validity  of  such  rule:  Ruehlman  v. 
Building   Association,    6    O.    C.    C.    285,    3    O.    C.    D.    456. 

If  a  building  and  loan  association  agrees  to  loan  money  secured  by  mort- 
gage, such  money  to  be  advanced  to  contractors  who  are  constructing  the  build- 
ing upon  orders  of  the  owner,  such  company  must  comply  with  the  orders  of 
the  owner;  and  if  it  pays  money  in  violation  of  his  order,  such  company  cannot 
receive  credit  for  such  payment:  Resting  v.  Donahue,  13  O.  C.  C.  653,  6  O.  C. 
D.  262  [appeal  from  Resting  v.  Donahue,  2  O.  D.   (N.  P.)  567.] 

IV.        EFFECT    OF    FORMER    STATUTORY    PROVISIONS. 

I'nder  former  statutes  a  building  and  loan  association  is  not  authorized 
to  refuse  a  loan  to  a  member  who  paid  the  highest  premium  at  competitive 
bidding:      State   v.   Building   Association,   29   O.    S.   92. 

Cancellation   of   loan. 

Sec.  9658.  To  cancel  such  loans  and  release  the  securities  on 
such  terms  as  the  board  of  directors  provide.  But  any  member  may 
have  his  loan  cancelled  upon  the  following  terms:  After  the  pre- 
mium for  one  year  has  been  paid,  and  also  the  interest  and  premium 
up  to  the  date  of  cancellation,  the  borrower  shall  pay  the  sum  ac- 
tually borrowed  less  the  dues  paid  and  dividends  credited,  and  also 
any  fines  or  other  assessments  required  by  the  constitution  and 
by-laws.     (99  v.  530-16.) 

Canceled  certificates  should  be  preserved  it.  the  files  with  other  fafcrs  of 
the  association  tn  such  manner  as  to  be  readily  accessible.  (Ruhno  of  the 
Veparttnent.)  ,       .        ....  , 

A  building  and  loan  association  is  without  authority  to  deduct  mortgage 
credts   for   the   purpose   of   paying   fixed   charges.     .      ,  ,        .  . 

Where  a  building  association  provides  by  its  by-laws  that  in  c.ise  a  share- 
holder who  has  received  a  loan  shall  die,  "his  or  her  heirs  or  legal  repre- 
sentatives may  return  the  same  to  the  association,  and  re<  cive  trom  the  asso- 
ciation the  value  of  the  stock  of  the  decedent  a.i  the  same  was  assessed  at  the 
annual    meeting   of    the   association    immediately    preceding    his    decease    or    con- 

[459) 


APPENDIX. 

tinue  to  pay  the  interest  and  monthly  dues,  and  become  in  all  respects  a  mem- 
ber of  the  association  until  the  same  shall  terminate,  it  was  held  that  if  the 
heirs  or  legal  representatives  of  the  deceased  shareholder  elect  to  return  the 
loan,  the  amount  to  be  returned  was  the  money  actually  received  plus  the 
premium    bid    for    precedence:       Loan    Association    v.    Ilcbout,    29    O.    S.    2r>!i. 

Such  corporations,  acting  in  good  faith  and  reasunably,  may  compromise 
with  a  member  and  release  him  from  further  obligation  to  the  corporation, 
whether  the  indebtedness  be  for  a  loan  or  on  subscription:  State  v.  Loan 
Association.   35   O.    S.    268. 

Section  3885  of  the  Revised  Statutes,  as  amended  April  15,  1880,  (77  O. 
L.  208),  did  not  provide  for  the  cancellation  of  parts  of  a  loan  as  year  by 
year  dues  are  paid  in  on  shares,  but  such  loan  is  to  be  settled,  with  such 
dues  and  other  credits,  when  the  share  is  fully  paid:  and  designating  the  or- 
dinary dues  as  "dues  paid  on  loans  awarded"  did  not  change  their  nature  or 
application:  Seibel  v.  Loan  Association,  43  O.  S..  371  (for  opinion  below,  see 
Seibel   v.    Building   Association,   9    Dec.    Rep.    422.    13    Bull.    20.''>.  ] 

One  who  acquiesced  for  seven  years  in  semi-annual  settlement,  and  then 
remained  silent  for  another  six  years  after  the  final  settlement  with  him,  and 
until  the  membership  in  the  association  had  changed  and  it  no  longer  had 
control  of  the  earnings  thus  distributed,  is  estopped  from  demanding  an  ac- 
counting for  any  larger  share  of  the  profits  of  the  association  than  was  re- 
ceived by  him  in  due  course:  Metz  v.  Loan  Association,  19  O.  U.  (N.  P.) 
161.  6  O.    L.   R.   418. 

For  question  of  distribution,  see,  also.  Building  Association  v.  Flach,  13 
Dec.    Rep.   665.   1   C.   S.   C.   R.    468. 


Reserve  and  undivided  profit  fund. 

Sec.  9659.  To  accumulate  from  the  earnings  a  "reserve  fund" 
for  the  payment  of  contingent  losses,  and  an  "undivided  profit 
fund,"  both  of  which  may  be  loaned  and  invested  as  other  funds 
of  the  association.     (99  v.  hZO-\Q>.) 

Idle  funds,  Jiow  invested. 

Sec.  9660.  To  invest  any  of  its  idle  funds,  or  any  part  thereof, 
in  bonds  or  interest  bearing  obligations  of  the  United  States,  or  of 
the  District  of  Columbia,  or  of  the  state  of  Ohio,  or  of  any  county, 
township,  school  district,  or  other  political  division  in  the  state  of 
Ohio,  or  of  any  incorporated  city  or  village,  in  the  state  of  Ohio; 
and  in  such  other  securities  as  now  are  or  hereafter  may  be  accepted 
by  the  United  States  to  secure  government  deposits  in  national 
banks.  But  such  investments  at  no  time  shall  amount  in  the  aggre- 
gate to  more  than  twenty  per  cent  of  the  assets  of  such  corpora- 
tion.    (99  V.  530-16.) 

May   deposit   idle   funds. 

Sec.  9661.  To  deposit  any  of  such  funds  or  jwirt  thereof,  in 
any  financial  institution  that  is  subject  to  inspection  by  the  United 
States,  or  by  the  state  of  Ohio;  and  receive  therefor  certificates  of 
deposit.     (99  v.  530-16.) 

[460] 


LAWS  OF  OHIO. 

Purchase  and  sale  of  interest-hearing  obligations. 

Sec.  9662.  To  buy  but  not  to  sell,  except  whenever  it  desires 
to  terminate  and  close  up  its  business  affairs  or  in  case  of  financial 
emergency,  and  then  only  with  the  consent  previously  had  of  the 
inspector  of  building  and  loan  associations,  interest  bearing  obliga- 
tions secured  by  real  estate  mortgages,  which  shall  in  all  respects 
comply  with,  and  be  within  the  rules  adopted  for  making  mortgage 
loans  by  the  corporation  making  such  investments.  Such  mortgage 
investments  may  be  held  and  reported  as  mortgage  loans.  (106  v. 
431.) 

Distribution  of  earnings. 

Sec.  9663.  To  make  such  annual  or  semi-annual  distribution  of 
the  earnings  as  is  hereinafter  provided,  and  as  the  constitution  and 
by-laws  may  prescribe.     (99  v.  530-17.) 

The  "value"  of  a  share  in  a  building  association  may  not  be  a  proper  basis 
for  distribution  of  earnings  due  such  share,  but  the  amount  of  dues  paid  on 
such  share  and  the  other  credits  to  the  share  make  such  basis,  whether  or  «ot 
a  loan  has  been  awarded  on  such  a  share:  Seibel  v.  Building  Association, 
43   O.   S.   371. 

A  member  of  an  association  has  a  right  to  his  pro  rata  proportioD  of 
the  accumulations  of  the  association:  Eversmann  v.  Schmitt,  11  Dec.  Rep. 
9,  24   Bull.   56. 

For  the  effect  of  former  legislation  on  the  rights  of  borrowing  members, 
see  Deiringer  v.  Building  Association,  2  O.  D.  (N.  P.)  543  [affirmed,  without 
report.  Deiringer  v.  Building  Association,  3C  Bull.  328;  Turner  Bauverera  y. 
Woodburn.    11    Dec.    Rep.    57.<^.    27    Bull.    409.] 

Certificate  of  increase,  decrease,  etc.,  where  filed. 

Sec.  9664.  To  increase  or  decrease  its  authorized  capital  or  the 
face  value  of  its  shares,  or  change  the  name  of  the  corporation 
by  a  majority  vote  of  its  board  of  directors.  A  certificate  of  suth 
action  shall  be  made  by  the  president  and  secretary,  and  duly  filed 
with  the  secretary  of  state,  after  which  in  the  use  of  the  changed 
stock  and  changed  name,  all  rights  of  all  parties  shall  remain  the 
same  as  before  such  change  was  made.     (99  v.  r>30-18.) 

Dissolution. 

Sec.  9t)l\^>.  To  dissolve  the  corporation  when  by  a  majority  vote 
of  the  stock  entitled  to  be  voted  umler  its  constitution  and  by-laws, 
which  shall  be  consistent  with  the  provisions  of  section  ninety-six 
hundred  and  forty-nine,  its  continuance  is  deemed  to  be  no  longer 
desirable,  but  subject  to  the  contract  rights  of  its  borrowers,  and 
the  vested  rights  of  its  members.     (99  v.  531-19.) 

1 461 1 


APPENDIX. 

But  as  to  dissolution,  see  Section  6!>S.     See  also  Sections  ilSIZ  and  lt07,i. 

If  the  association  is  insolvi-iit  and  payment  of  dues  is  stopped  by  mutual 
consent,  a  Iwrrnwinp;  menilK-r  who  ceasca  to  pay  dues  is  not  in  default:  Ilin- 
man    v.    Ryan,   3    O.    C".    C.    M9.   a    O.    C.    D.    S05. 

While  proceedings  to  wind  tip  the  aflairs  of  a  building  and  loan  asso- 
ciation are  pending,  interest  continues,  but  not  dues:  Flinman  v.  Ryan,  8 
O.  C.  C.  529.  2  O.  C.  n.  306. 

After  dissolution  of  a  building  and  loan  association  tlic  directors  still  have 
power  to  dis|>ose  of  the  assets  of  the  association  in  order  to  pay  its  debts  and 
to  distribute  the  proceeds  among  its  members:  Roth  v.  Loan  Co.,  13  O.  D. 
(N.    I'.)    154. 

If  certain  of  the  directors  of  a  building  and  loan  association  agree  to 
dissolution  niul  purcha.sc  the  a.ssets  at  a  certain  price  which  is  a  reasonable 
value  thereof,  a  slotkholder  who  knows  the  facts  at  the  time  and  acquiesces 
in  the  transaction,  can  not  thereafter  attack  the  transaction  as  fraudulent: 
Roth    V.    Loan   Co..   13   O.    D.    (N.    V.)    ir>4. 

Neither  a  stockholder  nor  a  creditor  can  obtain  an  injunction  by  reason 
of  illegal  or  fraudulent  acts  ui>on  the  part  of  the  directors  unless  a  repetition 
thereof  is  threatened:  Building  Co.  v.  Rehn,  6  O.  N.  P.  185,  8  O.  D. 
(N.   !•.)    594. 

Amendment  of  articles. 

Skc.  dGCid.  To  amend  its  articles  of  incorporation,  and  increase 
or  decrease  the  number  of  its  directors,  by  complying  with  all  the 
requirements  provided  in  its  own  constitution  for  the  amendment 
thereof.  The  other  officers  of  such  corporation  shall  consist  of  a 
president,  one  or  more  vice  presidents,  one  or  more  secretaries,  and 
such  others  as  its  constitution  and  by-laws  provide.  (.99  v.  531-20.) 

When  an  action  is  brought  by  stockholders  in  a  building  and  loan  asso- 
ciation against  such  association  and  its  assignee  for  the  benefit  of  creditors, 
to  set  aside  the  deed  of  assignment  for  fraud  or  want  of  power  to  make  the 
deed,  a  settlement  between  the  association  and  its  assigne  satisfactory  to  buth 
will  not  be  a  settlement  as  against  the  complaining  stockholders  unless  they 
consent  to   the  same:      Savings  Association   v.   Jones,  01   O.   ^.    147. 

The  filing  by  a  building  association,  mortgagee,  of  answer  and  cross-peti- 
tion in  a  proceeaing  brought  by  an  assignee  for  authority  to  sell  land,  is  not 
such  an  election  to  forfeit  the  stock  of  the  member  as  will  estop  the  asso- 
tion  from  claiming  fines  for  non-payment  of  dues  accruing  after  the  as.^ign- 
incnl:      Hutchin.'-on    v.    Straub_,   C4    O.    S.    i\'S. 

A  borrowing  member  of  a  building  a.s.^^ociation,  working  under  a  constitu- 
tion which  provided  for  amendments  and  in  force  at  the  time  of  the  enact- 
ment of  the  Kuehnert  law  (S3  v.  110),  is  bound  by  any  amendment  providing 
that  interest  should  be  charged  only  on  the  amount  remaining  due  at  the  be- 
ginning of  each  year,  and  dividends  paid  only  on  the  amount  paid  in  during 
the  current  year.      Metz   v.   Loan   t-o.,   19   O.    U.    (N.    1'.)    101,   0   O.    L.    K.    418. 

A  member  who  borrows  money  under  rules  wliicli  have  been  changed  by 
statute  cannot  attack  the  validity  of  such  rule:  kuehlman  v.  Building  Asso- 
ciation,  6   O.   C.    C.    285,   3   O.    C.    D.    450. 

Under  a  constitutional  provision  to  the  effect  that  a  certain  article  can 
not  be  amended,  amendment  thereto  can  be  made  only  by  unanimous  vote  of 
the  members:      McKeown   v.   Building  Association,   8   Dec.    Kep.    17,   5   Bull.    52. 

Constitution  and  by-laws. 

Sec.  9667.  To  provide,  by  constitution  adopted  by  its  members, 
and  by-laws  adopted  by  its  board  of  directors,  for  the  proper  exer- 
cise of  the  powers  herein  granted,  and  the  conduct  and  management 
of  its  affairs.     (99  v.  531-21.) 

[462] 


LAWS  OF  OHIO. 

The  fact  that  by4aws  appear  upon  records  of  a  bail<ling  and  loan  asso- 
ciation and  that  they  are  regarded  by  all  the  members  as  valid  and  binding, 
is  sufficient  without  proof  of  their  formal  adoption:  Hagerman  v.  BuikHng 
Association,  2o   O.   S.   18ti. 

Where  a  building  association  provides  by  its  by-laws  that,  in  case  a  share- 
holder who  had  received  a  loan  shall  die,  "his  or  her  heirs  or  legal  represen- 
tatives may  return  the  same  to  the  association"  and  receive  from  the  asso- 
ciation the  value  of  the  stock  of  the  decedent  as  the  same  was  as;;essed  al  the 
annual  meeting  of  the  association  immediately  preceding  his  decease,  or  con- 
tinue to  pay  the  interest  and  monthly  dues  and  become  in  all  respects  a  mem- 
ber of  the  association  until  the  same  shall  terminate,  it  was  held  that  if  the 
heirs  or  legal  representatives  of  the  deceased  shareholder  elect  to  return  the 
loan,  the  amount  to  be  returned  was  the  money  actually  received  plus  the 
premium  bid  for  precedence:      Building  Association  v.   Bebout,  29  O.   S.   2f)2. 

Like  other  corporations,  a  building  and  loan  association  has  power  to 
amend  its  constitution  and  by-laws;  a  failure  to  make  provision  theiefor  does 
not   prevent   the   power   from   existing:      Wangerien   v.    Aspell,    47    O.    S.    250. 

An  amendment  to  the  constitution  can  not  increase  the  liabilities  of  the 
borrowing  members  whose  obligations  were  incurred  before  such  amendment, 
unless  the  power  to  modify  such  obligations  was  received  when  the  loan  was 
made:  Betz  v.  Building  Association.  1  O.  N.  P.  42,  1  O.  D.  (N.  1'.)  58; 
see,  also,  on  this  question.   Wyatt   v.   Building   Co.,  12   O.    D.    (N.    P.)    528. 

A  building  and  loan  association  may  mo<lify  its  constitution  so  as  to  pro- 
vide for  an  attorney:  Building  Co.  v.  Kuehnert,  7  O.  N.  P.  2C4,  6  O.  D. 
(N.   P.)    602. 


Other  {towers. 

Sec.  9C68.  To  have  all  such  other  powers  a.s  are  necessary  and 
proper  to  enable  such  corporation  to  carry  out  the  purpose  of  its 
organization.     (99  v.  .531-22.) 

A  building  and  loan  ?. vKociati"n  has  no  power  to  purchase  land  on  credit 
in  order  to  distribute  it  among  its  members,  and  negotiable  notes  given  in 
payment  thereof  are  void  unless  in  the  hands  of  bona  fide  holders:  Vos  v. 
Building   Association,    3    Dec.    Rep.    CS2,    9    Bull.    194. 

Banks,  designation  of,  to  receive  funds. 

Sec.  9G()9.  The  board  of  directors  shall  designate  a  bank  or 
banks,  in  which  it  shall  cause  the  funds  of  such  corporation  to  be 
deposited  in  its  name.  Such  funds  when  so  deposited,  can  be  with- 
drawn only  in  such  manner  and  for  such  purpose  as  is  provided  in 
the  constitution  and  by-laws  and  authorized  by  law.     (99  v.  531-23.) 

Under  a  former  statute  (flate-i.  Sec.  383fl-4)  the  secretary  had  no  authority 
to  withdraw  funds;  and  his  power  over  the  funds  was  exhausted  when  he  h-id 
deposited   them   properly:      Trn.«;tees   v.    Deposit   ('o.   76   O.    S.    2.')3. 

Bond  of  officers. 

Sec.  9070.  All  bank  books  showing  such  deposits  shall  be  open 
to  the  inspection  of  any  director  at  any  time.  All  ofTicers  of  such 
association  who  have  charge  or  possession  of  money,  securities,  or 
property,  shall  give  bond  before  entering  upon  their  duties,  to  the 
satisfaction  of  the  l)oard  of  directors,  for  the  faithful  perfornwncc 

1-1(131 


APPENDIX. 

thereof,  and  the  safe  keeping  and  proper  application  of  all  moneys 
or  property  coming  into  their  hands.  All  officers  of  such  corpora- 
tions on  being  re-elected  to  office  shall  renew  their  bonds  The  bond 
may  be  increased  or  additional  securities  rtquircd  at  any  time  by  the 
board  of  directors.  Directors  shall  not  be  eligible  as  bondsmen, 
but  shall  be  individually  liable  for  any  loss  to  members,  caused  by 
their  neglect  to  comply  with  the  provision  of  this  and  the  preceding 
sections.     (99  v.  r>.31-23.) 

7"/iij  would  include  entering  into  cf  sufficicrt  bonds  by  the  president  and 
vice-president  of  an  associalian.     (Ruling  of  the  Department.) 

The  bond  of  each  cflieer  required  to  be  bonded  should  be  signed  by  at 
least  tu'O  sufficient  sureties  or  by  a  surety  company  authorized  under  the  laws 
of  Ohio  to  transact   business  in   this  state.      {Ruling   of   the   Ocpariment.) 

Whether  it  was  the  intention  of  the  party  .signing  the  instrument  to  adopt 
the  seal  of  another  is  a  question  of  fact  for  the  jury,  the  burden  being  on 
the  plaintiff  to  prove  that  the  party  adopted  the  seal  or  scroll:  Building  Asso- 
ciation  V.   Cummins,.  45   O.   S.   CG4. 

Two  or  more  persons  who  sign  a  bond  may  adopt  the  same  seal:  Building 
Association   v.   Cummins,   45  O.   S.   664. 

A  surety  upon  the  bond  of  an  officer  is  liable  only  for  his  acts  within 
the  direct  scope  of  his  duties  as  such  ofl'icer:  Trustees  v.  Deposit  Co.,  76  O. 
S.  253  [aflRrming  Livingston  v.  Deposit  Co.,  7  O.  C.  C.  (N.  S.>  66,  17 
O.  C.   D.  662.) 

An  attorney  of  a  t)uitding  and  loan  association  is  not  an  officer  thereof, 
and  his  bond  is  not  an  official  bond  in  the  ordinary  sense  of  the  term:  Build- 
ing V.  Kuehnert.  7  O.   N.  P.  264.  6  O.  D.   (N.  P.)   502. 

As  to  the  extent  of  the  liability  of  surety  upon  the  bond  of  an  attorney  for 
a  building  and  loan  association,  see  Building  Co.  v.  Kuehnert,  7  O.  N.  P. 
264,  6  O.  D.   (N.   P.)   502. 


Reserve  fund. 

Sec.  9671.  The  amount  to  be  set  aside  to  the  reserve  fund,  for 
the  payment  of  contingent  losses  shall  be  determined  by  the  board 
of  directors,  but  in  all  permanent  or  perpetual  associations,  at  least 
five  per  cent  of  the  net  earnings  shall  be  set  aside  each  year  to  such 
fund  until  it  reaches  at  least  five  per  cent  of  the  total  assets.  All 
losses  shall  be  paid  out  of  such  fund  until  it  is  exhausted.  When 
the  amount  in  such  fund  falls  below  five  per  cent  of  the  assets  as 
aforesaid,  it  shall  be  replenished  by  annual  appropriations  of  at 
least  five  per  cent  of  the  net  earnings  as  hereinbefore  provided 
until  it  again  reaches  such  amount.     (99  v.  531-24.) 

Charges  made  from  the  reserve  fund  should  show,  in  each  instance,  for 
■what  purposes  they  arc  made.     (Ruling  of  the  Department.) 

Any  amount  ivhich  a  building  and  loan  association  is  required  to  pay  as 
attorney's  fees  in  foreclosure  proceedings  should  be  paid  out  of  the  earnings 
as  all  ordinary  expenses  incurred  by  the  association  are  paid,  and  should  not 
be  charged  against  the  reserve  fund.  (Ruling  of  the  Department,  supplemented 
by  opinion  of  the  Attorney  General.) 

A  reserve  fund  belongs  to  the  members  of  the  association  in  proportion 
to  their  interests,  whether  they  are  borrowers  or  not:  Seibel  v.  Building 
Association,  43  O.   S.  371. 

[4641 


LAWS  OF  OHIO. 

Expenses,  how  {>aid. 

Sec.  9672.  All  expenses  of  such  association  shall  be  paid  out 
of  the  earnings  only,  and  so  much  of  the  earnings  as  may  be  neces- 
sary must  be  set  aside  each  year  for  such  purpose.  But  charges 
incident  to  a  loan,  if  paid  by  the  borrower,  shall  not  be  deemed 
a  part  of  the  current  expenses.     (99  v.  532-25.) 

Dividends. 

Sec.  9673.  After  payment  of  expenses  and  interest,  a  portion  of 
the  earnings  to  be  determined  by  the  board  of  directors,  annually 
or  semi-annually,  shall  also  be  placed  in  the  reserve  fund  for  the 
payment  of  contingent  losses,  as  hereinbefore  provided,  and  a  fur- 
ther portion  of  such  earnings  to  be  determined  by  the  board  of 
directors,  shall  be  transferred  as  a  dividend  annually  or  semi-annu- 
ally, in  such  proportion  to  the  credit  of  all  members  as  the  cor- 
poration by  its  constitution  and  by-laws  provides,  to  be  paid  to 
them  at  such  time  and  in  such  manner  in  conformity  with  this 
chapter  as  the  corporation  by  its  constitution  and  by-laws  provides. 
Any  residue  of  such  earnings  may  be  held  as  undivided  profits  to 
be  used  as  other  earnings,  except  that  such  undivided  profit  fund 
at  no  time  shall  exceed  three  per  cent  of  the  total  assets  of  the 
association.     (99  v.  532-25.) 

The  members  of  an  association  are  equally  entitled  to  dividends,  whether 
they  are  borrowing  members  or  not:  Seibel  v.  Building  Association,  43 
O.  S.  371  I  for  opinion  below,  see  Seibel  v.  Building  Association,  9  Dec.  Rep. 
422,  13  Bull.  2651;  see,  to  the  same  effect,  Richter  v.  Loan  Co.,  4  O.  N.  P. 
97,   6   O.    D.    (N.    P.)    95. 

A  borrowing  member  who  knows  the  custom  of  a  building  and  loan  asso- 
ciation with  reference  to  declaring  dividends  and  who  receives  them  for  a  long 
period  of  time  in  accordance  with  such  custom,  can  not,  after  a  further  lapse 
of  time,  demand  that  the  dividends  for  such  previous  period  be  readjusted 
upon  a  different  basis:  Ruehlman  v.  Building  Association,  (i  O.  C.  C.  285, 
3  O.  C.  D.  4.'>6:  Ueiringer  v.  Building  Association,  2  O.  D.  (N.  P.)  543 
[affirmed,    without   report,    Deiringcr    v.    Building    Association,    30    Bull.    328. 1 

As  to  the  mcthud  of  computing  dividends  under  former  statutes,  see,  also. 
Building  Association  v.  Vogeler,  7  O.  N.  P.  005,  5  O.  D.  (N.  P.)  581;  Dei- 
ringer  v.  Building  Association,  2  O.  D.  (N.  P.)  543  (affirmed,  without  report, 
Dcinnger  v.  Building  .Association,  36  Bull.  328];  Turner  Bauvcrcin  v.  Wood- 
burn,  11    Dec.   Rep.   578,  27   Bull.   409. 


Sec.  9674.  All  losses  shall  be  assessed  in  the  same  proportion 
and  manner  on  all  members  after  the  amounts  in  the  reserve  fund 
and  the  undivided  profit  fund  have  been  applied  to  the  payment 
thereof.     (99  v.  532-25.) 

The  members  of  a  building  association,  whether  borrowers  or  non-borrowers, 
have  a  mutual  interest  in  its  affairs;  and,  sharing  alike  in  its  earnings,  must 
••aiit   alike   in   bearing   its   losses:      Kversniann    v.    Schmitt,    53   O.    S.    174. 

14651 


APPENDIX. 

A  horrowiiiR  member  is  one  who  receives  in  advance  the  par  value  of 
his  shares,  anil  agrees,  in  consideration  of  such  advance,  to  pay  the  weekly 
dues  on  the  shares  and  the  interest  on  the  loan  until  the  dues  paid  and  the 
dividend  declared  and  not  paid,  are  equal  to  the  par  value  of  his  shares.  He 
then  ceases  to  be  a  member  and  is  entitled  to  a  cancellation  of  the  mortgage 
given  to  secure  the  obligations  arising  from  the  loan:  Evermann  v.  Schmilt, 
53   O.    S.    174. 

The  mortgaRe  executed  by  a  borrowing  member  of  a  building  association 
contained,  among  other  conditions,  a  stipulation  for  the  payment  of  such 
"assessments"  as  might  lie  levied  on  him  as  a  member.  Losses  occurred,  and 
the  association  became  insolvent,  whereupon  a  receiver  was  appointed  to  wind 
up  its  affairs,  who  ascertained  a  "shortage"  in  the  assets  and  made  a  pro  rata 
assessment  on  the  members  to  meet  the  same.  It  was  held  that  an  assess- 
ment for  such  purpose  was  within  the  above  stipulation  of  the  mortgage,  and 
that  the  member  was  not  entitled  to  its  cancellation  until  paid.  It  was  held 
further  that,  in  such  case,  the  receiver  was  the  proper  person  to  a.-^certain 
the  amount  of  the  losses  and  make  an  assessment  on  the  members  to  meet 
the  same:  Eversmann  v.  Schmitt,  53  O.  S.  174;  see,  to  the  same  effect, 
Demland   v.    Loan   Association,   20   O.    C.    C.   223,   11    O.    C.    D.    249. 

A  rule  which  restricts  the  liability  of  members  to  the  amount  which  stands 
upon  the  books  of  the  association  is  invalid:  Loan  Co.  v.  Richter,  16  O. 
C".  ('.  191,  9  O.  C.  D.  74,  see,  also.  Loan  Co.  v.  Ashbrook,  8  O.  N.  P.  'iid, 
12   O.   D.    (N.    r.)    10.  .  ■  f       •  u 

A  member  of  a  building  association  can  not,  by  filing  a  notice  of  with- 
drawal, whether  first  or  last  on  the  list,  escape  his  share  of  the  losses  sus- 
tained by  the  association  by  reason  of  the  depreciation  of  its  mortgage  se- 
curities sustained  at  the  time  his  withdrawal  was  filed  with  the  company: 
Vincent  v.   Deposit  Co.,   5  O.   N.   P.   278,  7   O.   D.    (N.   P.)    353. 

A  provision  in  a  mortage  to  the  effect  that  dues  are  to  be  paid  until  the 
mortgage  loan  is  repaid  is  binding,  although  the  stock  is  to  be  paid  in  a 
shorter  period  of  time:  Haynes  v.  Building  Association,  2  O.  N.  P.  181. 
3   O.   D.    (N.   P.)    228. 

For  the  liability  of  members  of  a  building  and  loan  association  in  case  of 
insolvency,  see  also.  In  re  Building  Association,  7  O.  N.  P.  518,  6  O.  D. 
(N.   P.)   556. 

Listing  of  shares  for  taxation. 

Sec.  9075.  The  shares  and  loans  advanced  to  its  members  shall 
be  exempt  from  taxation,  except  that  shares  of  stock  upon  which 
no  loans  have  been  made  or  money  advanced  by  the  company, 
shall  be  considered  and  held  as  credits.  The  members  individually 
shall  list  for  taxation  the  number  of  shares  held  by  them,  and  the 
true  value  thereof  in  money,  on  the  day  preceding  the  second  Mon- 
day in  April  each  year,  and  they  shall  be  assessed  at  such  valua- 
tion for  taxation  and  taxes  as  other  property.     (99  v.  532-26.) 

A  building  and  loan  association  advancing  or  payiny  taxes  on  real  estate 
securities  mortgaged  to  \t  should  first  examine  carefully  the  provisions  of  the 
following  sections  of  the  General  Code  of  Ohio. 

Section  5681.  Each  person  holding  lands  shall  pay  the  tax  essessed  there- 
on each  year,  but  an  agent  or  attorney  shall  not  be  required  to  pay  such 
taxes,  unless  sufficient  money  of  his  principal  is  in  his  hands  to  pay  them. 
(R.   S.   Sec.   2847.)  ,       .  .   .      .u 

Section  5682.  Each  person  owning  lands,  may  authorize  or  consent  to  the 
payment  by  another,  of  the  taxes  levied  upon  such  lands.  A  person  so  paying 
8uch  taxes  shall  first  obtain  from  the  owner  or  owners  of  such  lands  a  certi- 
ficate of  authority  to  pay  them,  signed  in  the  presence  of  two  witnesses,  and 
acknowledged  before  an  officer  authorized  to  administer  oaths.  Such  cer- 
tificate shall  contain  an  accurate  description  of  the  property  as  shown  by  the 
tax  duplicate,  the  amount  of  the  taxes  levied  thereon,  the  year  for  which  they 
were  levied,  the  name  of  the  per.son  authorized  to  pay  them,  and  the  date  of 
the   payment   thereof.      (R.   S.    Sec.    2847.) 

U66] 


LAWS  OF  OHIO. 


Section  5683.  The  person  so  paying  such  taxes,  within  ten  days  from  the 
date  of  the  payment  thereof,  shall  file  such  certificate  in  the  office  of  the 
county  recorder  for  record.  When  the  certificate  has  been  filed  the  amount 
thereof  with  interest  at  eight  per  cent  per  annum  from  the  date  of  the  pay- 
ment of  such  tax,  shall  become  a  lien  upon  such  real  estate  in  preference  to 
all  liens  thereafter  attaching  to  the  property  and  in  preference  to  all  pre- 
existing liens  the  holders  of  which  have  executed  and  acknowledged  such  cer- 
tificate of  authority.  The  money  so  paid,  with  the  interest  thereon,  may  be 
recovered  by  action  for  money  paid  to  his  use  against  the  person  legally  liable 
for  the  payment  of  the  tax.  Such  action  may  be  brought  by  the  person  so 
paying  the  tax,  at  any  time  after  the  expiration  of  one  year  from  the  date  of 
the  payment  thereof.  The  certificate,  so  filed  with  the  recorder,  shall  be  re- 
corded and  cancelled,  in  like  manner  as  mortgages  on  real  estate,  in  a  book 
to  be  separately  kept  and  indexed  by  him  for  that  purpose,  and  the  recorder 
shall  receive  such  fees  as  are  prescribed  bv  law  for  recording  real  estate 
mortgages.      (R.   S.    Sec.   2847.) 


Inspection 


DEPARTMENT     OF     BNILDINC     AND     LOAM     ASSOCIATION. 


General   Cose 

SECTION 

674       Inspector    of    building    and    loan 

associations. 
GT5      Bond,    oath    and    approval. 
876       Duties   of   inspector. 
(577       Deputies. 
677-1   Salary  of  inspector. 
677-2   Salaries      of      deputies,      assist- 
ants, etc. 
677-3   Expenses. 
GV7-4   Expenses. 
677-5   Seal. 
677-6  All   instruments   sealed   with   the 

seal,   received  in   evidence. 
677-7   Place    of    ofJicc. 
678       Requirements  from  foreign  asso- 
ciations. 
Certificate    of    authority    to    do 

b'lsiness. 
Collection    of    interest    and    ex- 
change of  securities. 
.Securities    liable    for   claimants. 
Annual   report. 
Form    of    repcirt. 
Annual    exami:?ation. 
Expenses  of  examination. 
Revocation    of    charter    for    ille- 

ijjal   practice.-*. 
Diss'dution      if      condition      un- 
sound. 
Powers   of    examiners. 
Inspector    may    publish    result. 
May     cancel     authority     of     for- 
eign   association. 
691       Fees  to  be  paid  to  inspector. 


679 

680 

681 
682 
683 
t;8l 
685 
686 

687 

rsft 

689 
690 


Genksal  Coce 

SECTION 

692  Securities  to  be  deposited  with 
treasurer  of  state. 

693  Dissolution  or  consolidation  of 
building   and    loan   associations. 

694  Forfeitun.'   for    noncompliance. 

695  Building   and    loan    annual    re- 
port. 

12172  Embezzlement  by  officer  of 
building  and  loan  association. 

13188  ."rigning  name  to  order  without 
artiioiity. 

3  31  S3  Declaring  dividend  greater 
than  earned. 

13190  False    entry    in    book.    etc. 

13191  Aiding  officer  tj  violate  pre- 
'•fding   sections. 

13102       Failing  to   make  reports,   etc. 
i:i;<»3       IJability  on   bond. 
11972       Directors  may  appoint  trustees. 
irj7?       Removal    and    dutied    of    trus- 
tee.;. 
S72  4       Dividends    to     be     paid     from 

.iurplu.s    profits    only. 
8725       Inpaid   intc-nst    not   profits. 
S~'2(i      How    profits   ascertained. 
872V       What     advertisements     prohib- 
ited. 
872^       Liability   for   violation. 
8027       General    powers. 
8386       Liability    of    stockholders. 
8087       Corporations      created      subse- 
quent  to    November   23,    l'.)03. 
86S8       Limitation  of  action  to  enforce 
liability. 


Ina{>ector  of  building  and  loan  associations. 

Sec.  074.  The  governor  with  the  advice  and  consent  of  the 
senate,  shall  appoint  an  inspector  of  building  and  loan  associations, 
who  shall  serve  for  a  term  of  three  years.  No  such  inspector  of 
building  and  loan  associations  shall  have  any  official  connection  with 

[•ICTl 


APPENDIX. 

a   building   and   loan   association,    or   be   interested    in   the   business 
thereof,  except  as  a  stockholder.      (103  v.   181-1.) 

Bond,  oath  and  a^{>rovai. 

Sec.  (575.  Before  entering  upon  the  discharge  of  the  duties  of 
his  office  the  inspector  of  building  and  loan  associations  shall  give 
a  bond  to  the  state  in  the  sum  of  ten  thousand  dollars  with  two  or 
more  sureties  or  with  a  surety  company  authorized  to  do  business  in 
the  State  of  Ohio,  approved  by  the  governor,  conditioned  for  the 
faithful  discharge  of  the  duties  of  his  office.  Such  bond,  with  the 
approval  of  the  governor  and  the  oath  of  office  endorsed  thereon, 
shall  be  deposited  with  the  secretary  of  state  and  kept  in  his  office. 
(103  V.  181-2.) 

Duties  of  inspector. 

Sec.  67(5.  The  inspector  of  building  and  loan  associations  shall 
see  that  the  laws  relating  to  building  and  loan  associations  are  duly 
executed  and  enforced.  When  a  violation  of  a  law  relating  to 
building  and  loan  associations  is  reported  to  him  he  shall  take,  or 
cause  to  be  taken,  the  testimony,  under  oath,  of  any  and  all  persons 
supposed  to  have  any  knowledge  of  such  violation,  and  cause  such 
testimony  to  be  reduced  to  writing.  If  he  be  of  the  opinion  that 
there  is  sufficient  evidence,  he  shall  cause  the  person  suspected  of 
such  violation  to  be  arrested  and  charged  with  such  offense,  and  shall 
furnish  the  attorney  general  or  the  proper  prosecuting  attorney 
with  the  information  obtained  by  him,  the  names  of  the  witnesses 
and  a  copy  of  all  material  testimony  taken  in  the  case.  (103  v. 
181-3.) 

De'^uties. 

Sec.  677.  With  the  approval  of  the  governor,  the  inspector  of 
the  building  and  loan  associations  may  employ  from  time  to  time, 
the  necessary  deputies,  assistants,  clerks  and  examiners,  to  assist  him 
in  the  discharge  of  the  duties  imposed  upon  him  by  law.  With  such 
approval  he  may  remove  any  such  clerk  or  examiners  at  any  time. 
(103  v.  182-4.) 

Salary  of  inspector. 

Sec.  677-1.  The  salary  of  the  inspector  of  building  and  loan  asso- 
ciations shall  be  three  tliousand  six  hundred  dollars,  per  annum,  and 
shall  be  paid  at  the  same  time  as  the  heads  of  other  state  depart- 
ments. (103  V.  182-5.) 

[4681 


LAWS  OF  OHIO. 

Salaries  of  deputies,  assistants,  etc. 

Sec.  677-2.  The  inspector  of  building  and  loan  associations  shall 
fix  the  salaries  of  the  deputies,  assistants,  clerks,  and  examiners  at 
such  rates  per  annum  as  the  governor  shall  approve.  Upon  vouchers 
approved  by  the  inspector  of  building  and  loan  associations,  such 
salaries  shall  be  paid  by  the  treasurer  of  state,  upon  the  warrant  of 
the  auditor  of  state.     (103  v.  182-6.) 

Expenses. 

Sec.  677-3.  The  actual  and  necessary  traveling  expenses  of  the 
inspector  of  building  and  loan  associations,  and  of  the  deputies, 
assistants,  clerks  and  examiners,  incurred  in  the  discharge  of  their 
official  duties  shall  be  paid  monthly  by  the  treasurer  of  state,  upon 
the  warrant  of  the  auditor  of  state.  Vouchers  therefore  shall  be 
fully  itemized,  approved  by  the  inspector  of  building  and  loan  asso- 
ciations, and  countersigned  by  the  auditor  of  state.     (103  v.  182-7.) 

Sec.  677-4.  All  expenses  incurred  by  the  inspector  of  building 
and  loan  associations,  in  the  performance  of  the  duties  imposed  upon 
him  by  law,  including  the  salary  of  such  inspector,  his  deputies,  assis- 
tants, clerks,  and  examiners,  shall  be  paid  from  funds  appropriated 
therefor.     (103  v.  182-8.) 

Seal. 

Sec.  677-5.  The  sea!  of  the  inspector  of  building  and  loan  asso- 
ciations shall  be  one  and  three-fourths  inches  in  diameter,  shall  have 
engraved  thereon  the  coat  of  arms  of  the  state,  and  shall  be  sur- 
rounded by  the  words,  "Inspector  of  Building  and  Loan  Associations 
of  Ohio."     (103  v.  182-9.) 

Seal  as  evidence. 

Sec.  677-6.  Every  certificate  or  other  instrument  executed,  or 
order  made,  by  the  inspector  of  building  and  loan  associations,  in 
pursuance  of  any  authority  conferred  upon  him  by  law,  and  sealed 
with  the  seal  of  his  ofike,  or  copies  thereof  duly  authenticated  under 
such  seal,  shall  be  received  in  evidence  in  all  courts  of  this  state. 
(\m  V.   182-10.) 

Place  of  office. 

Sec,  677-7.  The  inspector  of  building  and  loan  associations  shall 
be  furnished  by  the  state  with  suitable  rooms,  at  the  seat  of  the 
government,  for  conducting  the  business  of  his  office.  (103  v.  182-11.) 

f-irai 


APPENDIX. 

FOREIGN    ASSOCIATIONS. 

Requirements  from  foreign  associations. 

Sec.  678.  Foreign  building  and  loan  associations  doing  business 
in  tbis  state  shall  conduct  such  business  in  accordance  with  the  laws 
governing  domestic  associations.  No  foreign  building  and  loan  asso- 
ciation shall  do  business  in  Ohio  until  it  procures  from  the  inspec- 
tor of  building  and  loan  associations  a  certificate  of  authority  to  do 
business  in  this  state  after  complying  with  the  following  provisions: 

1.  It  shall  deposit  with  the  inspector  one  hundred  thousand 
dollars,  in  cash  or  bonds  of  the  United  States  or  this  state,  or  of  a 
county  or  municipal  corporation  therein,  satisfactory  to  the  in- 
spector. 

2.  It  shall  file  with  the  inspector  a  certified  copy  of  its  charter, 
constitution  and  by-laws,  and  other  rules  and  regulations  showing 
its  manner  of  conducting  business  together  with  a  statement  such  as 
is  required  annually  from  all  associations. 

3.  It  shall  also  file  with  the  inspector  a  written  instrument,  duly 
executed,  agreeing  that  a  summons  may  issue  against  it  from  any 
county  in  this  state  directed  to  the  sheriflf  of  the  county  in  which 
the  office  of  inspector  is  situated,  commanding  him  to  serve  it  by 
certified  copy  personally  upon  the  inspector  or  by  leaving  a  copy 
thereof  at  his  office.  The  inspector  shall  mail  a  copy  of  any  papers 
served  on  him  to  the  home  office  of  such  association.     (99  v.  533-31.) 

Certificate  of  authority  to  do  business. 

Sec.  679.  When  a  foreign  building  and  loan  association  has  com- 
plied with  the  provisions  of  the  preceding  section,  and  the  inspector 
is  satisfied  that  it  is  doing  business  according  to  the  laws  of  Ohio 
and  is  in  sound  financial  condition,  he  shall  issue  his  certificate  of 
authority  to  the  association  to  do  business  in  this  state.  Annually 
thereafter,  upon  filing  the  annual  statement  herein  provided  for,  if 
the  inspector  is  satisfied  as  herein  provided,  he  shall  issue  a  renewal 
of  such  certificate.     (99  v.  533-32.) 

Collection  of  interest  and  exchange  of  securities. 

Sec.  680.  A  foreign  building  and  loan  association  may  collect 
and  use  the  interest  on  securities  deposited  as  provided  by  law  so 
long  as  it  fulfills  its  obligations  and  complies  with  the  laws  of  this 
state.  It  may  also  exchange  them  for  other  securities  of  equal  value 
satisfactory  to  the  inspector.     (99  v.  534-33.) 

[470] 


LAWS  OF  OHIO. 

Securities  liable  for  claimants. 

Sec.  681.  The  deposit  made  by  a  foreign  building  and  loan  asso- 
ciation with  the  inspector  of  building  and  loan  associations  shall  be 
held  as  a  security  for  all  claims  of  residents  of  this  state  ag^ainst  such 
association,  and  be  liable  for  all  judgments  or  decrees  thereon,  and 
subjected  to  the  pa\-ment  thereof  in  the  same  manner  as  the  property 
of  other  non-residents.  Should  an  association  cease  to  do  business 
in  this  state,  the  inspector  may  release  securities  in  his  discretion, 
retaining  sufficient  to  satisfy  all  outstanding  liabilities.  (99  v.  534-34.) 

See  also   Section   178   of  the   General   Code   of   Ohio. 

ANNUAL  REPORTS  OF  ASSOCIATIONS. 

Annual  report. 

Sec.  682.  Ever>-  building  and  loan  association  doing  business  in 
this  state,  annually,  at  the  end  of  each  fiscal  year  or  within  forty 
days  thereafter,  shall  make  a  full  and  detailed  report  in  writing  of 
the  affairs  and  business  of  the  association  for  the  preceding  year, 
and  showing  its  financial  condition  at  the  end  thereof.  With  the 
first  report  made  by  an  association  it  shall  file  a  certified  copy  of 
its  constitution  and  by-laws,  or  other  rules  and  regulations,  show- 
ing its  manner  of  doing  business.     (99  v.  534-35.) 

Form  of  report. 

Sec.  683.  The  report  required  in  the  preceding  section  shall  be 
the  form  and  contain  such  information  as  is  prescribed  by  tlie  in- 
spector of  building  and  loan  associations.  It  shall  be  sworn  to  by 
the  secretary  and  its  correctness  attested  by  at  least  three  directors 
or  an  auditing  committee  appointed  by  the  board.  The  original  shall 
be  filed  with  the  inspector  of  building  and  loan  associations  within 
forty  days  after  the  close  of  tlie  fiscal  year.  Such  an  abstract  there- 
fore as  the  inspector  requires  shall  be  posted  for  sixty  days  in  the 
office  or  meeting  place  of  such  association,  and  published  in  a  news- 
paper regularly  issued  in  the  countr>-  in  which  it  is  located.  (99  v. 
534-36.) 

EXAMINATION    OF   ASSOCIATIONS. 

Annual  examination. 

Sec.  684.  At  least  once  each  year  the  inspector  of  building  and 
loan  associations  shall  make  an  examination  into  the  affairs  of  each 
such  association,  or  cause  it  to  be  made  by  a  person  appointed  by 
him  for  that  purpose.     (99  v.  534-37.) 

14711 


APPENDIX. 

Expenses  of  examination. 

Sec.  t)85.  The  expenses  of  all  examinations  shall  be  paid  l>y  this 
state,  except  that  when,  by  the  laws  of  any  other  state,  district, 
territory  or  nation,  examinations  of  such  associations  of  this  state 
are  required  or  permitted  to  be  made  by  any  official  or  other  authori- 
ty of  such  other  state,  district,  territory  or  nation  at  the  expense 
of  such  associations,  then  the  expenses  of  all  such  examinations 
made  by  the  inspector  of  this  state,  of  such  associations  of  that 
state,  district,  territory  or  nation,  must  be  respectively  charged  to 
and  collected  from  such  associations  so  examined.     (99  v.  534-37.) 

Revocation  of  charter  for  illegal  practices. 

Sec.  686.  If  upon  examination,  the  inspector  of  building  and  loan 
associations  finds  any  domestic  association  conducting  its  business 
in  whole  or  part  contrary  to  law,  or  failing  to  comply  therewith,  he 
shall  notify  the  board  of  directors  of  such  association  of  such  fact, 
in  writing.  If,  after  thirty  days,  such  illegal  practices  or  failure 
continue,  he  shall  communicate  the  facts  to  the  attorney  general, 
who  shall  cause  proceedings  to  be  instituted  in  the  proper  court  to 
revoke  the  charter  of  such  association.     (99  v.  535-38.) 

Dissolution  if  condition  unsound. 

Sec.  687.  If,  upon  examination,  the  inspector  of  building  and 
loan  associations  finds  that  the  affairs  of  a  domestic  building  and 
loan  association  are  in  an  unsound  condition,  and  that  the  interest 
of  the  public  demand  its  dissolution  and  the  winding  up  of  its  busi- 
ness, he  shall  so  report  to  the  attorney  general,  who  shall  institute 
the  proper  proceedings  for  that  purpose.     (99  v.  535-39.) 

Powers  of  examiners. 

Sec.  688.  An  examiner  appointed  by  the  inspector  of  building 
and  loan  associations  under  the  provisions  herein  relating  to  such 
associations,  shall  have  access  to  and  may  compel  the  production  of 
all  books,  papers,  securities,  moneys  and  other  property  of  an  asso- 
ciation under  examination  He  may  administer  oaths  to,  and  examine 
the  officers  and  agents  of  such  association  as  to  its  affairs.  (99  v. 
535-40.) 

Inspector  m.ay  publish  result. 

Sec.  689.  If  the  inspector  of  building  and  loan  association  deems 
it  to  the  interest  of  the  public,  he  may  publish  the  results  of  sucb 

[472] 


LAWS  OF  OHIO. 

examination  in  a  newspaper  of  general  circulation  in  the  county  in 
which  such  association  is  located,  if  it  is  a  domestic  association,  and 
in  some  newspaper  in  the  city  of  Columbus  if  it  is  a  foreign  asso- 
•ciation.     (99  v.  535-41.) 

May  cancel  authority  of  foreign  association. 

Sec.  690.  If  upon  examination  the  inspector  of  building  and  loan 
associations  finds  that  a  foreign  association  does  not  conduct  its 
business  in  accordance  with  law,  or  that  its  affairs  are  in  an  unsound 
condition,  or  if  it  refuses  to  permit  an  examination  to  be  made,  he 
may  cancel  its  authority  to  do  business  in  this  state,  and  cause  a 
notice  thereof  to  be  mailed  to  the  home  office  of  the  association  and 
published  in  at  least  one  newspaper  published  in  the  city  of  Colum- 
bus. After  the  publication  of  such  notice  no  such  association  or 
agent  thereof  shall  receive  further  stock  deposits  from  members 
residing  in  this  state,  except  payments  on  stock  on  which  a  loan 
has  been  taken.     (99  v.  535-42.) 

FEES. 

Fees  to  be  ^aid  to  inspector. 

Sec.  691.  Foreign  building  and  loan  associations  shall  pay  to  the 
inspector  of  building  and  loan  associations  the  following  fees: 

For  filing  an  application  for  admission  to  do  business  in  this 
state,  five  hundred  dollars ; 

For  each  certificate  of  authority  and  annual  renewal  thereof,  two 
hundred  dollars. 

Every  building  and  loan  association  doing  business  in  this  state, 
whether  foreign  or  domestic,  shall  pay  to  the  inspector  of  building 
and  loan  associations,  for  filing  each  annual  report,  at  the  time  said 
annual  report  is  filed,  the  sum  of  ten  dollars,  and  in  addition  there- 
to, one-eightieth  of  one  per  cent  of  its  assets,  as  shown  in  such 
report.  All  such  fees  collected  shall  be  paid  into  the  general  revenue 
fund.     (106  V.  236.) 

Securities  to  be  dei>osite<l  with  treasurer  of  state. 

Sec.  692.  All  securities  or  cash  deposited  with  the  inspector  of 
building  and  loan  associations  shall  be  deposited  with  the  treasurer 
of  state,  who,  with  his  .sureties,  shall  be  responsible  for  the  safe 
keeping  thereof.  The  treasurer  shall  deliver  such  securities  only 
upon  the  written  order  of  the  inspector.     (99  v.  536-44.) 

147:!  1 


APPENDIX. 

Dissolution  of  consohdation. 

Sec.  693.  A  building  and  loan  association  or  a  savings  associa- 
tion may  provide  in  its  constitution  and  by-laws  for  the  time  and 
terms  of  its  dissolution  and  for  its  consolidation  with  one  or  more 
of  such  corporations  on  terms  and  conditions  to  be  determined  upon 
by  their  board  of  directors.  In  case  of  the  dissolution  of  such  a 
corporation,  its  board  of  directors  by  a  majority  vote  may  be  au- 
thorized to  sell  and  transfer  its  mortgage  securities  or  other  property, 
or  botli,  to  another  corporation,  person  or  persons,  subject  to  the 
vested  and  accrued  rights  of  the  mortgagors.     (99  v.  537-48.) 

PENALTIES. 

Forfeiture  for  non-com^hance. 

Sec.  694.  A  building  and  loan  association  which  does  business  in 
this  state  without  first  complying  with  the  provisions  herein  or  which 
violates  or  fails  to  comply  with  provisions  of  law  relating  to  build- 
ing and  loan  associations  shall  forfeit  and  pay  not  less  than  fifty 
dollars  nor  more  than  one  thousand  dollars,  to  be  recovered  by  an 
action  in  the  name  of  the  state  and  on  collection  paid  into  the  state 
treasury.     (99  v.  536-45.) 

Record  of  proceedings  of  inspector.     Report. 

Sec.  695.  The  inspector  of  building  and  loan  associations  shall 
keep  and  preserve  in  permanent  form  a  full  record  of  his  proceed- 
ings, including  a  concise  statement  of  each  association  examined, 
and,  in  his  annual  report,  he  shall  report  the  general  conduct  and 
condition  of  the  building  and  loan  associations  doing  business  in  this 
state.  Such  report  shall  include  the  information  contained  in  the 
statements  required  of  the  associations  in  tabulated  form.  (106  v. 
510.) 

Embezzlement  by  officer. 

Sec  12472.  Whoever,  being  a  president,  director,  trustee,  mem- 
ber of  a  committee,  secretar>',  treasurer,  attorney  or  other  officer  or 
agent  of  a  building  and  loan  association  or  savings  association  as 
provided  by  law,  embezzles,  abstracts,  or  willfully  misapplies  any 
of  the  moneys,  funds,  or  credits  thereof,  or  issues  or  puts  into  cir- 
culation a  warrant  or  other  order,  or  assigns,  transfers,  cancels,  or 
delivers  a  note,  bond,  draft,  mortgage,  judgment,  decree  or  other 
written  instrument  belonging  thereto,  or  raises  money  otherwise,  or 

[474] 


LAWS  OF  OHIO. 

receives  money  from  a  member  or  other  person  for  and  in  the  name 
of  such  association  unless  authorized  so  to  do  by  the  board  of  direc- 
tors thereof,  shall  be  imprisoned  not  less  than  one  year  nor  more 
than  ten  years  and  be  liable  to  the  person  injured  thereby  to  the 
extent  of  the  damage  incurred.  Suit  may  be  brought  against  the 
person  so  violating  and  the  sureties  on  his  bond  given  to  such  asso- 
ciation for  the  faithful  performance  of  his  duty.     (99  v.  536-46.) 

Signing  name  without  authority. 

Sec.  13188.  Whoever,  being  a  president,  director,  trustee,  mem- 
ber of  a  committee,  secretary,  treasurer,  attorney  or  other  officer  or 
agent  of  a  building  and  loan  association  or  saving  association,  as 
provided  by  law,  signs  the  name  of  a  person  to  an  order  or  warrant 
for  the  payment  of  money  without  proper  power  of  attorney  or 
written  order  from  the  person  to  whose  order  such  order  or  war- 
rant is  made  payable,  shall  be  imprisoned  not  less  than  one  year  nor 
more  than  ten  years.     (99  v.  530-46.) 

Declaring  dividend  greater  than  earned. 

Sec.  13189.  Whoever,  being  a  member  of  a  board  of  directors 
of  a  building  and  loan  association  or  savings  association,  as  pro- 
vided by  law,  votes  to  declare,  or,  being  a  financial  or  first  secretary 
thereof,  declares  or  advises  the  board  of  directors  thereof  to  declare 
a  greater  dividend  than  has  been  actually  earned  by  such  associa- 
tion, for  the  purpose  of  deceiving  the  people  or  defrauding  the 
members  thereof,  shall  be  imprisoned  not  less  than  one  year  nor 
more  than  ten  years.     (99  v.  536-46.) 

False  entry  in  book,  etc. 

Sec.  13190.  Whoever,  being  a  member  of  a  board  of  directors 
of  a  building  and  loan  association  or  savings  association,  as  provided 
by  law,  certifies  to,  or  makes  a  false  entr>'  on  a  book,  report  or  state- 
ment of  or  to  such  association,  v.ith  intent  to  deceive,  injure  or 
defraud  it  or  another  company,  body  politic  or  corporate  or  person, 
or  to  deceive  any  one  appointed  to  examine  the  affairs  of  such  asso- 
ciation, shall  be  imprisoned  not  less  than  one  year  nor  more  than 
ten  years.     (99  v.  536-16.) 

Aiding  Officer  to  violate  preceding  sections. 

Sec.  13191.  Whoever,  with  intent  to  deceive,  injure  or  defraud 
a  building  and  loan  association  or  savings  association,  as  provided 
by  law,  or  other  company,  body  politic  or  corporate  or  person,  aids 

1475) 


APPENDIX. 

or  abets  a  president,  secretary,  treasurer,  committee  or  otiicr  person 
in  violation  of  any  of  the  next  four  preceding  sections  shall  be 
imprisoned,  not  less  than  one  year,  nor  more  than  ten  years. 
(99  V.  53G-46.) 

Failing  to  make  reports,  etc. 

Sec.  13192.  Whoever,  being  an  officer  thereof,  fails  to  make  the 
reports  required  of  him  by  the  laws  provided  for  the  organization, 
regriilation  and  inspection  of  building  and  loan  associations  or  sav- 
ings associations,  or,  being  an  officer,  employe  or  other  person,  so- 
licits business  for,  aids  or  assists  such  association  to  do  business 
contrary  to  the  provisions  of  such  laws,  or  without  having  complied 
therewith,  shall  be  fined  not  more  than  five  hundred  dollars  or  im- 
prisoned not  more  than  six  months,  or  both.     99  v.  536-46.) 

Liability  on  bond. 

Sec.  13193.  Whoever  violates  any  provision  of  the  next  five  pre- 
ceding sections  shall  be  liable  to  the  person  injured  thereby  to  the 
extent  of  the  damage  incurred  and  suit  may  be  brought  against  the 
person  so  violating  and  the  sureties  of  the  bond  given  by  him  to 
such  association  for  the  faithful  performance  of  his  duty.  Fines 
collected  under  the  next  five  preceding  sections  shall  be  paid  into 
the  state  treasury.     (99  v.  536-46.) 

Directors  may  a^^oint  trustees. 

Sec.  11972.  The  board  of  directors  or  other  officers  having  the 
control  and  management  of  a  corporation  in  this  state,  may  appoint 
three  trustee  to  adjust  and  settle  its  affairs.  The  trustees  so  ap- 
pointed shall  be  authorized  to  use  the  corporate  name  for  such 
period  as  may  be  necessary  for  the  adjustment  and  settlement  of  its 
affairs,  by  suit   or  otherwise.    (R.  S.  5687.) 

Where  a  corporation  is  winding  up  its  own  affairs  under  a  .statute,  as  by 
appointing  trustees  under  G.  C.  11972.  the  courts  will  not  interfere  on  the 
mere  ground  of  insolvency:  Savings  Co.  v.  Rehn,  C  O.  N.  P.  185,  8  O.  D. 
(N.  P.)   594. 

The  courts  will  not  appoint  a  receiver  for  fraud  and  mismanaRement,  it 
injunction  will  be  sufficient  relief:  Savings  Co.  v.  Rehn,  6  O.  N.  P.  185, 
8  O.   D.   (N.   P.)   594. 

Removal  and  duties  of  trustees. 

Sec.  11973.  The  trustees  so  appointed  shall  report  annually  to 
the  stockholders  of  the  corporation  a  full  and  succinct  statement  of 
its  affairs.  A  majority  in  interest  of  the  stockholders  may  remove 
a  trustee,  or  appoint  a  person  to  a  vacancy  occasioned  by  the  death, 
rcsig^nation  or  removal  of  a  trustee.     (R.  S.  5688.) 

1476] 


LAWS  OF  OHIO. 

DIVIDENDS. 

Dividends  to  be  ^id  from  surplus  profits  only. 

Sec.  87'^.  Directors  of  a  corporation  organized  under  the  laws 
of  this  state  shall  not  make  dividends  except  from  surplus  profits 
arising  from  its  business.  (R.  S.  3269-1.) 

Unpaid  interest  not  profits. 

Sec.  8725.  In  calculating  its  profits,  prior  to  a  dividend,  interest 
then  unpaid,  although  due,  on  debts  owing  to  it,  shall  not  be  in- 
cluded.    (R.  S.  3269-2.) 

How  profits  ascertained. 

Sec.  8726.  In  order  to  ascertain  the  surplus  profits  from  which  a 
dividend  may  be  made,  in  the  account  of  profit  and  loss  there  shall 
be  charged  and  deducted  from  the  actual  profits  — 

1.  All  ordinary  and  extraordinary  expenses,  paid  or  incurred,  in 
managing  the  affairs  and  transacting  the  business  of  the  corporation. 

2.  Interest  paid,  or  then  due  or  accrued,  on  debts  it  owes. 

3.  All  losses  of  the  corporation.  In  computing  its  losses,  debts 
owing  to  it  which  have  been  due  without  prosecution,  or  interest 
paid  thereon,  for  more  than  one  year,  or  upon  which  judgment  was 
recovered,  but  has  been  more  than  two  years  unsatisfied,  and  on 
which  also  for  that  period,  no  interest  was  paid,  shall  be  included. 
(R.  S.  3269-3.) 

BorrowinK  members  whose  interest  is  rebated  each  year  are  not  entitled 
to  dividends  except  upon  the  current  year's  dues:  Atlantic  B.  Ass'n.  v.  Vegeler, 
.1    Low.    D.    .081;    7   N.    P.    60G. 

What   advertisements   jtrohihited. 

Sec.  8727.  No  such  corporation  shall  advertise  a  larger  amount 
of  capital  stock  than  actually  has  been  subscribed  and  paid  in,  nor 
advertise  a  greater  dividend  than  actually  has  been  earned  and 
credited  or  paid  to  its  stockholders  or  members.     (R.  S.  3269-3.) 

Liability  for  violation. 

Sec.  H72H.     Every  director  of  such  a  corporation,  who  violates  or 

is  concerned  in  violating  any  provision  of  the  next   four  preceding 

sections  shall  be  personally  liable  to  its  creditors  and  stockholders 

for  any  loss  which  thereby  they  respectively  sustain.     (R.  S.  3209-'!,) 

Section  (820»  5)  wns  rhanRcd  by  the  legislatorc  to  Section  HM.  (Section 
178,  General  Code  of  Ohio.) 

[1771 


■  APPENDIX. 

General  {towers. 

Sec.  8()'27.  Upon  filing  articles  of  incorporation,  the  persons  who 
subscribed  them,  their  associates,  successors,  and  assigns,  by  the 
name  and  style  provided  therein,  shall  be  a  body  corporate,  with 
succession,  power  to  sue  and  be  sued,  contract  and  be  contracted 
with ;  also,  unless  specially  limited,  to  acquire  and  hold  all  property, 
real  or  personal,  necessary  to  effect  the  object  for  which  it  is  created, 
and  at  pleasure  convey  it  in  conformity  with  its  regulations  and  the 
iaws  of  this  state.  Sucli  corporation  also  may  make,  use,  and  at 
will  alter  a  common  seal,  and  do  all  other  acts  needful  to  accom- 
plish the  purposes  of  its  organization.       (R.  S.  Sec.  3239.) 

Liability  of  stockholders. 

Si:c.  8686.  The  stockholders  of  a  corporation  who  are  holders 
of  its  shares  at  a  time  when  its  debts  and  liabilities  arc  enforcible 
against  them,  shall  be  held  liable,  equally  and  ratably,  but  not  one 
for  another,  in  addition  to  tlieir  stock  in  an  amount  equal  thereto, 
to  the  creditors  of  the  corporation,  to  secure  the  payment  of  such 
debts  and  liabilities.  No  stockholder  who  transfers  his  stock  in 
good  faith,  if  such  transfer  is  made  on  the  books  of  the  company 
or  on  the  back  of  the  certificate  of  stock  properly  witnessed  or 
tendered  for  transfer  on  its  books  prior  to  the  time  when  such 
debts  and  liabilities  are  so  enforcible,  may  be  held  to  pay  any  por- 
tion thereof.     (R.  S.  Sec.  3258.) 

Cor'^orations  created  subsequent  to  November  23.  1903. 

Sec.  8687.  The  next  preceding  section  shall  not  apply  to  stock- 
holders in  a  corporation  created  after  the  twenty-third  of  November, 
1903,  nor  to  debts  or  liabilities  of  a  corporation  incurred  after  such 
date.  As  to  all  debts  and  liabilities  of  corporations  for  profit  in- 
curred after  such  date,  the  stockholders  thereof  shall  be  under  no 
liabilities  other  than  those  stated  in  article  XIII,  section  three,  of 
the  constitution  of  Ohio.     (R.  S.  Sec.  3258.) 

Limitation  of  action  to  enforce  liability. 

Sfx.  8688.  An  action  upon  the  liability  of  stockholders  under  the 
two  next  preceding  sections  can  only  be  brought  within  eighteen 
months  after  the  debt  or  oWigaaon  shall  become  enforcible  against 
stockholders.    (R.  S.  3258a.) 

[178] 


LAWS  OF  OHIO. 


FEE  BILL   OF   SECRETARY   OF   STATE. 

AS  THE  SAME  APPLIES  TO  BUILDING   AND   LOAN   ASSOOATIONS  ORGANIZED 
UNDER   THE  LAWS  OF  OHIO. 

For  filing  articles  of  incorporation  of  a  building  and  ktan  association.  ..  .$10  M 
For  filing  a  certificate  of  increase  of  capital  stock  of  any  such  association  6  00 
For  filing  a  certificate  of  reduction  of  capital  stock  of  any  corporation.  ...  Q  00 
For    filing    a    copy    of    the    decree    of    court    changing    the    name    of    any 

corporation    5  00 

For    filing    a    certified    copy    of    the    acceptance    by    any    corporation    in- 
corporated prior  to  the  adoption  of  the  present  constitution  of  any 

of   the   provisions   of   the   General   Code fl  00 

For  filing  an  amendment  to  articles  of  incorporation  of  any  corporation  6  00 
For   filing   for   any   corporation   a   certificate    of    extension    of    purpose   or 

change  of  domicile    5  00 

For  filing  other  certificates  not  hereinbefore  enumerated 6  00 

For  filing  the  certificate  of  subscription   required  to  be  filed  by   Section 

8«33   of   the   General   Code    2  00 

For  making  a  certificate  under  the  great  seal  of  the  State 1   00 

For  recording  miscellaneous  records,  papers  or  other  documents  required 
by  law  to   be  recorded  in  the  office  of  the  Secretary  of   State,  20 
cents  a  hundred  words. 
For  making  copies,   10  cents  a  hundred  words. 
For    atfixing    geal    of    office    to    copies    50 

The  statutes  provide  that  all  fees  collected  by  the  Secretary  of 
State  shall  be  paid  into  the  State  Treasury;  and  that  he  shall  neither 
file  our  record  any  of  the  articles  of  incorporation,  certificates  or 
other  papers  hereinbefore  referred  to  unless  the  fees  for  filing  same 
are  first  duly  paid. 


\41f)\ 


APPEN.DIX. 


BIBLIOGRAPHY 

LIBRARY   OF   CONGRESS. 

Washicik'ton,   D.    (". 

Division    of    BihIioKrapliy. 

H.    H.    B.     MkVBR,    ChIEI'    niBI.IOGKAfKEIt. 


LIST  OF  REFERENCES  ON  BUILDING  AND 
LOAN  ASSOCIATIONS. 

American  Kuildiiig  Association  News.  Published  ,it  Cincinnati,  O.  Differ- 
ent VoJumea. 

Academy  of  Political  Science,  New  V'ork.  Business  and  the  Public  Wel- 
fare. New  York.  The  Academy  of  Political  Science,  1912.  185  p.  (Its 
Proceedings....    Vol.    II,    No.    a.) 

Co-operative  Loan  Society  by  P.  Jay:  The  Celluloid  Club  Sav- 
ing and  Loan  Department,  by  .S.  T.  Siinmonds;  Co-operative  Saving 
and   l^an   Association.s,  by   E.   E.    Pratt.      HD36U.A25 

1131. A4   Vol.  2   No.  2 

Albrecht,  Rudolph.  Die  Beamten-Baupenossenschaften  im  Rahmen  der 
deutschen  Baugeno.ssenschaftsbewcgunf;.  Stuttgart,  F.  Enke,  1911.  166 
p.  (Tubingcr  staatswisscnschaftliche  Abhandlungen.  .  .  .  11  hft....) 
"Literatur":    p.    104-166.  HG2156.G3A6 

Attwood,  D.  F.  How  to  Start  a  Branch  of  the  People's  Building  Loan 
and  Saving  Association.  ..  .Ag<-nt.s  Manual....  (Geneva,  N.  Y.,  1889] 
16  p.  HG2626.G3A8 

Beers,  George  E.  Building  and  Loan  Associations.  (In  The  American 
and  English  Encyclopa-dia  of  Law.  2nil  edition,  vol.  4,  pp.  999-1082, 
Northport,   N.    Y.,    1897.) 

Contents:  Definition  and  description;  the  building  association  as  a 
corporation;  ofiicers,  and  asents;  rights  and  powers;  membership; 
stock:  rights,  duties,  and  liabilities  of  members;  dues;  forfeiture; 
withdrawals;  the  building  association  loan;  the  premium  usury;  satis- 
faction  of    the    loan,    dissolution    and    winding    up. 

Bemis,   Edward    W.      Cxi-operation   in    New    England.      (In    History   of   Co- 
operation   in    the    United    States,    pp.    171 33.      Baltimore,    1888.      Johns 
Hopkins  University  Studies  in   Historical  and  I'olitical   Science.    Vol.   0.) 
"Co-operative  Banks   for  Building  and   Ixian   Associations:"  p.   93101. 

Bloom,  J.  E.  A  Novel  Constitution  for  Building,  Savings  and  Loan  Asso- 
ciations.    New  York,  Wynkoop,  Hallenbeck  &  Co.,  printers  [1889]   31  p. 

HG2128.B4 

Bowkett,  Thomas  E.  Freehold  Property  for  Mechanics.  Notes  of  lectures 
delivered  at  the  Popular  Literary  Institution,  in  June  and  July,  1843: 
containing  instructions  for  the  formation  of  societies,  by  means  of 
which  every  mechanic.  ..  .may  become  a  freeholder.  London,  Cleave, 
1843.     22   p.  HG2156.G8B8 

Brazil.      I^ws,  Statutes,  etc.   Lei  e  Regulamento  da  Reforma   Hypotliecaris 

Establendo  as   Bases   das   Sociedades   de   Credito    Real.      Rio   de   Janeiro 

Typographia   Nacional.    18G5.      04    p.  HG2051.B7A4    186.'; 

The    Building   and    I^an    Association    Index....    Chicago,    M.    P.    Riley    & 

Bro.,   printers,   1889.      22   p.  HG2G26.C4B8 

The   Building  and    Loan    Herald.      New   York,    189.5-1901.      7    vol. 

Title    varies    18961899:    The    National    Building    and    Loan     Herald. 

HG2121.B8 

The  Building  Association  Manual,  containing  a  full  exposition  of  the  prin- 
ciples, operations,  advantages,  and  disadvantages  of  building  associa- 
tions. ..  .  By  a  solicitor  of  a  Philadelphia  building  association.  Phila- 
delphia, King  &  Baird,   printers,   1854.     40  p.  HG3126.B93 

[480] 


BIBLIOGRAPHY. 

12  Building     Societies'     Association,     London.       Judicial     decisions     affecting 

building  societies.  Reprinted  from  the  "Building  Societies'  Gazette," 
1894  /1895-1903/1904.  With  sumaries  and  index.  Vol.  1-0.  Issued  by 
the  Building  Societies'  Association.  London,  Building  Societies'  Asso- 
ciation    11896-1906L    6    V. 

13  Busse,    Henry    W.      The    Mutual    Home    Clearing    System St.    Paul, 

Minn..     The  Pioneer   Press  Co.,  1S97.     26  p.  HG2128.B9 

14  [Caldwell,   Robert  W. ]   The  American   Homestead  and  Trust   Company  or 

Society.    Plans    for    buying    homesteads,    releasing    mortgages,    borrowing 

and  loaning  money (Pittsburg?   1890)    113   p.  HG2128.C24 

16  California.  Bureau  of  Building  and  Loan  Supervision.  Report  on  the 
building  and   loan   associations....    Sacramento,   1894-1917/18.      14  y. 

1894-1917,    Reports    by   the    Board   of    Commissioners   of   the   Building 
and    Loan    Associations.  HG2150.C2 

16  Canada.     Census  and  statistics  office.     The  Canada  Year  Book   1905.     Ot- 

tawa:  Printed   by  S.   E.   Dawson,   1906.     xli,  351   pp. 

Loan   Companies  and   Building  Societies,  pp.  2G0-266.  HA774.S81 

17  Canada.      Department    of    Finance.      Report    of    the    Loan    Companies    and 

Building  Societies  in  the  Dominion  of  Canada.  ..  .with  comparative 
tables  from   1867 Ottawa,   1888-1910.     21   v  in   9.  HG2156.C3A3 

18  Carriere,    Georges.      Le    Logement    Populaire    et    les    Habitations    a    Bon 

Marche.     Paris,  J.  B.   Bailliere  et  fils,  1912.  215  p.  HG7338.A3C3 

19  California.      Laws,    Statutes,    etc General    laws    relating   to    building 

and  loan  associations.   [Sacramento,  1913?]  20  p.         HG2133.C2A5  1913 

20  Clark,    Charles    E.      The    Local    Building    Association— A    cornerstone    of 

the  Commonweal.  An  Address.  ..  .Covington,  Ky.  ..  .Cincinnati- 
Chicago,   The   American   Building   Association   News    [1908]    10   p. 

HG2152.C7 

21      President's    Annual    Address    Before    the    Kentucky    State    League    of 

Local  Building  Associations,  Covington,  Kentucky,  April  22.  1908. 
Cincinnati-Chicago.  The  American  Building  Association  News  [1?08] 
g  p  HG2153.K4C6 

82  Clement,  Henry.  Habitations  a  Bon  Marche  et  Caisses  d'Epargne.  Paris, 
Bloud  &  Cie,   1911.  63  p.    (Questions  de  Sociologie.)  HG21,')C.F82C6 

23  Cloughly.  Alfred  Comp.    Mechanics'  Lien  Law  of  the  State  of  New  Jersey 

and  Builders'  Guide.  ..  .containing  the  law  as  revised,  March  27,  1874, 
and  all  amendments  and  supplements  thereto.  Also  a  directory  of 
prominent  dealers  in  various  kinds  of  material  used  in  the  construc- 
tion of  buildings Newark,  N.  J.,  W.  A.   Baker  &  Co.,  printers,   1887, 

128  p.  HD4934.M6C5 

24  Conference  National  des  Sociot^s  d'Habitations  Ouvrieres.     Brussels,  1898. 

Documents,  rapports  &  proces-verbaux.  Bruxelles,  Bruylant-Christophe 
&   Cie.   1899.      7i-)3   p.  HD7343.A3C7 

25  Connecticut.      Commissioner  on   Building  and   Loan   Associations.     Annual 

report,  relating  to  building  and  loan  associations  and  mortgage  invest- 
ment, companies 1897-date.     Hartford,  Conn.  1898-1914.     18  v.  in  17. 

'Earlier   Reports    Published   by    Bank    Commissioners."    Bowktr,    State 
Publications,    pt.    1,    p.    77.  HG2150.C7 

26  Connecticut.       Laws,     Statutes,     etc.       I,aws     Relating    to     Banks,     Savings 

Banks,  and  Trust  Companies,  Building  and  I^an  Associations  and  In- 
vc.itment  Companies,  1915.  Comp.  by  the  Bank  Commissioner.  Hart- 
ford, Pub.   by  the  state   [1015]    110  p.  1IG2426.CSA3   1915 

27  The   Co-operative    News.      Devoted   to   the   interests   of    building,    loan   and 

savings  associations  and  our  American  homes.  Cincinnati,  O.^  Rosen- 
thal   &    Co.     [1890-1893)    3    V.  H02121.C7 

38  Criiger,  Hans.  Statistischer  Beitrag  zur  BaugenossenschaftsBewegung  in 
Deut-schland.     Berlin,  Druck  von  L.  Simion,  1906.     4  p.       HG2156.G3C8 

20  Davis,  Henry  F.  A.  The  Law  and  Practice  of  Building  and  Loan  So- 
cieties,   Including   the    Law   of    Cooperative    Building    Societies.      4th    cd. 

Re-cast     ainl     in     great     part     rewritten     by     J.     E.     Walker London, 

Sweet   &   Maxwell,    1896.      604    p. 

30     Croad,   Horatio  J.     Car  Trusts,  Building   U>an  Association,  and  In.stalment 

Plan    Monthly    Tables [1st    ed. )    New    York,    Burr    Priiiting     House 

[1888]    18   p.  HG1030.C9I 

[4811 


APPENDIX. 


31  Davis  W|illiatn)  L.  BuiUlini:;  Association  Dividend  Tables.  Showing;  the 
dividend  on  one  to  five  shares,  at  2,  3,  4....  12  per  cent.  ..  .Cincinnati, 
R.    Clarke    &    Co.,    Printers,    1885.       27    p.  1101636. D26 

88  De  Bower,   Herbert   F.      Building  and   Loan  Associations   Make   Both   Men 

and  Cities.  (In  La  Follttte,  Robort  M.  3d.  The  making  of  America, 
vol.    10.    pp.    226-231.      Chicago,    lOOG.)  HC103.125 

33  Desjardins,    Alphonso.      The    Co-operative   People's   Bank,    La   Caisse   Po- 

pulaire.  New  York  City,  Division  of  Remedial  Loans,  Russell  Sage 
Foundation    [1914]     42    p.  HG2156.C4C6 

34  Devine,    Henry    C.      People's    Co-operative   Banks   for   Workers   in    Towns, 

and  Small  Holders,  Allutment  Cultivators,  and  Others  in  Country  Dis- 
tricts, London.  I'aris,  New  York,  Toronto  and  Melbourne,  Cassel  and 
Company,    1908.      147    p. 

••Bibliographic  note":   p.  146-147.  nG2998.C8D5 

35  Dexter,   Seymour.        A   Treatise   on   Co-operative   Savings  and    Loan   Asso- 

ciations; Including  Building  and  Loan  Associations.  Mutual  Savings 
and  Loan  Associations,  Accumulating  Fund  Asscciaticns,  Co-operative 
Banks,   etc.      New   York,   D.    Appleton   and   Company,   1889.      299  p. 

HG2126.D52 

36  District  of   Columbia.      I>aws,    Statutes   etc.      Banking   and   Building   Asso- 

ciation Laws  of  the  District  of  Columbia.  C  omp.  under  the  direction 
of  the  C'.mptroller  of  the  Currency,  December  1,  1910.  Washinton, 
Go%-t.    Print.    Off.,    1910.      40    p. 

Treasury   Department,   Document   No.   2797.      Comptroller  of  the  Cur- 
rency. HG2426.D6A4     1916 

37  Doran,   Joseph   I.     The  Operations  of   Our   Building  Associations.      Phila- 

delphia, Philadelphia  Social  Science  Association  [1876]  (Philadelphia 
Social   Science  Association.     Papers  Read  Before  the  As.'iociation,  1876.) 

HG2162.D7 
Reprinted  from  the  Penn   Monthly   for  July  and  August,   1876. 

38  Dunn,    Edward    J.      Plan    and    Regulations    for    Home-building,    Loan    and 

Investment  Companies.  Aldrich  &  Dunn,  proprietors  of  plan.  St. 
Louis,    Nixon-Jones    Printing   Co.,    18S5.      19    p.  HG2126.D89 

89  Dye,    George    W.      Dye's    Lightning    Interest    Tables,    Prepared    Especially 

for  the  Use  of  Building  and  Loan  Associations.  [Newport,  Ky.,  G. 
Vesper,  printer,  1914]   12  p.  HG2129.D82 

40  Eldredge  D[aniel].      Massachusetts  Co-eperative   BanV;s,  or  Building  Asso- 

ciations. A  History  of  their  Growth  from  1877  to  1893.  Prepared  for 
the  World's  Columbian  Exposition.  Boston,  Mass.,  U.  S.  A.,  Press 
of  G.   H.  Ellis,  1893.   44   p.  HG2163.M4E4 

41  Endlich,  Gustav  A.     The   Law  of  Building  Associations,  Being  a  Treatise 

Upon  the  Principles  of  Law  Applicable  to  Mutual  and  Co-operative 
Building,  Homestead,  Saving,  Accumulating,  Loan  and  Fund  Associa- 
tions, Benefit  Building  Societies,  etc.  in  the  United  States.  2nd  ed. 
Jersey   City,    F.    D.,   Linn   &    Co.,    1895.      684   p. 

42  Engel,    Ernst.      Die   moderne   Wohnungsnoth.      Signaturen,   Urr.achen    und 

Abhiilfe.     Leipzig,  Duncker  &  Humblot,  1873.   102  p.  HD7339.A3E5 

43  France.      Laws,    Statutes,   etc.        Proposition    de   loi    Relative   aux    Societes 

d'Epargne,  (renvoyoe  a  la  Commission  des  Societes  d'Assurances.) 
Presentee  par  MM.  L.  Bonnevay,  Guioysse.  Guillaume  Chastenet, 
C'loares,  etc..  Deputes.  [Paris,  Motteroz  et  Martinet,  Impriraeurs  as 
la  Chambre  des  Deputes,   [1909]   13  p.      (Chambre  des  Depute.     9  legisl. 

sess.     1909,  No.  2347.     Annexe  au  Procis-vcrbal 2  mars  1909.) 

HG1939.F6B7 

44  [Franklin,   William]    of   Connecticut.      The   Building   Associations   of   Con- 

necticut and  Other  States  Examined,  with  a  Review  of  the  New  York 
and  Massachusetts  Systems.  .  .  .  Also,  a  Complete  Review,  from  Official 
Documents,  of  all  the  Building  Associations.  ...  Established  in  Connec- 
ticut.     To   which   is   added,    for   the    Management   of   such    Institution   a 

Model   Plan New   Haven,   W.    Franklin,   1856.    225   p. 

HG2126.F7 

43  Fritre,  James  P.  Investment  Building  and  Loan.  Reasons  Why.  [Peoria, 
111.,   1892]    12   p.  HG2126.F8 

[482] 


BIBLIOGRAPHY. 

40     Furth,     Eniil,     Ritter     von.       Wohnungsamter     and     Wohnungsinspelction. 
Wien,    F.    Deuticke,    1905.      67    p.      (Schriften   der    Oestcrr.    Gesellschaft 
.  fur   Arbeiterschutz.      VI.    Hft.) 

"Das Schriftchen    ist   eine    etwas   erweiterte   Wiedergabe    eines   am 

18    Marz  1904   in  der  Oesterreichischen  Gesellschaft  fiir  Arbeiterschutz 
gehaltenen   Vortrages."   p.   3.  HD7337.A3F8 

47  Garland,    Nicholas    S.       A     Compilation    of    the    Laws    and    Amendrnents 

Thereto  Relating  to  Building  Societies,  Loan  Companies,  Joint  Stock 
Companies  and  Interest  on  Mortgage  and  Other  Acts  Pertaining  to 
Monetary  Institutions,  as  Passed  by  the  Dominion  Parliament  and  the 
Several  Provincial  Legislatures;  to  which  is  Appended  a  Complete  Re- 
ference Table  to  Private  Acts  and  Amendments.  By  N.  Surrey  Gar- 
land     Also    the    Laws    Relating    to    Banks    and    Banking,    Comp.    by 

William    Wilson....    Ottawa,    A.    S.    Woodburn,    1882,    ^^^j^JlSS  C2G2 

48  German-American    Building   Associations,   Baltimore.      Deposits   and   Loans 

in  the  German-American  Building  Associations.  Making  no  Allowance 
for   Losses   or  Expenses.    [Bahimore,   1892]    6  p.  HG1636.G37 

49  Graf,    Max.      Bedeutung,    Zweck    und    Ziel   der    Baugenossenschaften   nebst 

Arileitung  zur  Grundung  und  Leitung  derselben.  Leipzig,  H.  Klasing, 
1902.      90   p.    (Ludwig   Hubert's   prakti.sche   gewerbliche   Bibltotnek.) 

HG2156.G3G8 

50  Grant-Smith,  \V.  Colin.     Building  Societies'  Accounts.     Specially  Adapted 

for  permanent  Societies  and  Societies  using  Interest  Tables.  London, 
Gee   &   Co      1903.      104    p.      ("The   Accountants'    Library,      vol.    XXV.) 

HF5801.A2 

61  Gt.  Brit.  Board  of  Trade.  Co-operative  Societies.  Board  of  Trade. 
(Labor  Department.)  Report  on  Industrial  and  Agricultural  Co- 
operative Societies  in  the  United  Kingdom,  with  Statistical  lables.... 
London,  Pub.  by  H.  M.  Stationary  off.,  printed  by  Darling  and  Son,  1912, 
273   p.      (Farlianitnt    Papers  by    Command.    I  d.    004:').;  „     .     .      „ 

A    revision    and     extension    of    "Workmen's    Co-operative    Societies, 
pub.    190L     (Cd.    698) 

'  Periodical    Co-operative    Publications"    p.    257. 

"List  of  Publications  Dealing  With  Co-operation  in  Library  of  Labour 
Department"   p.    25H-2(i9. 

"List   of   Latest   Board   of   Trade   Publications":   p.    271-273. 

HD3486.A4     1912 

52  Registry    of    Friendly    Societies.    Building     Societies,     7th-10lh    An- 
"nual    Report   by   the    Chief    Registrar    of    Friendly    Societies   of   the    Pro- 

cecdincs  of  the  Registrars  under  the  Building  Societies  Acts;  with  an 
Abstract  of  the  Annual  Accounts  and  Statements  of  Societies....  1901- 
1904.  London.  Printed  for  H.  M.  Stationary  off.,  by  Eyre  and  Spot- 
tiswoode.        1902-1905.      4  v.  HG2loO.G/Ai 

53  Hamilton,    J^mes     H.       Savings    and     Savings    Institutions.       New    York. 

London,    The    Macmillan    Company,    1902.    436   p. 

"Partial    List    of    Authorities    Consulted":    pp.    429-432. 
"Building    and    Loan    Associations":    pp.    1291-J8. 

54  Hart,  Walter.     Hart's  Precise  System  for  Building  and  Loan  Assoriations\ 

New   York,   Press  of   H.   J.   Ronalds    11880]    28   p.  HG2128.H3 

53  Hathaway,  J.  and  Comp.  Short  Rate  Table  for  Terms  Less  Then  One 
Ytar.      Milwaukee,    Wis.,    Burdick    &   Armitage,    i.nnters,    1880.      o   p^ 

HGIC39.1i40 

50  Hauptverband  deutscher  Gewerblicher  Genossenschaftcn,  Berlin.  Ge- 
schiftsstatistik Hrsg.  von  dem  Hauptverband  deutscher  Gewerbli- 
cher  Genossenschaftcn Wittenberg,    1911.      1    vol.  HD3497.H3 

67  llillh()U:.c.  Virgil  P.  The  Ilillhouse  Interest  Tabhs  Constructed  'vM'e'^^ia'- 
ly  for  Buililing  and  Loan  Associations  and  Applicable  to  All  .Monthly 
Payment  Contracts.     Topeka,   Kans.,   V.    P.   Hillhousc,   1017.      63   p 

liOlOou.  iiU 

58  Hourigan,  John.     Maturity  Tables  for  Building  and  Loan  A.ssociations  and 

Other    Purposes.       Albany,    Weed-Parsons    Printing    ^""n'"ny.    piin  ers 
1893.      2    V.  HG10.J9.H8 

59  Huntington.   Theodora   T.      Work   of   the    Rcm.dial    Loan    •'^"C'r''"},^"^.; 

1912.      I  New   York]    1912.  HG2060.H8 


APPENDIX. 

60.  Illinois.      Auditor's   office.      Annual   Report   of   the   Auditor  of    Public   Ac- 

counts of  Building,  Loan  and  liumestead  Associations. ...  Springfield, 
1,S94  1917.    25    V.  IIG2160.I3 

61.  Indiana.      Building   and    Loan   Association    Department.      Annual    Report, 

1K1)2/931912.      Indianapolis,   18tt31»13.   19   v.   in   1(1,  nG2ir,0lb 

62  Indiana.  I^ws,  Statutes,  etc.   I-aws  of  Indiana  Relating  to  Rural  Loan  and 

.'Savings    Associations.     !fll3.       W.     H.     O'Brien,    Auditor    of     State 

Gilbert  H.  Hendren,  Chief  Clerk,  Stmte  Building  and  Loan  Department. 
Indianapolis,  VV.  B.  Burford,  contractor  for  state  printing  and  binding, 
1913.   29  p.  HG2061.U6I6  1918 

63  Interest    Table    for    Building    Associations.    [Philadelphia,    P.    Hausinann. 

1877.)    3    p.  HGl636.Ifl 

64  International    Congress    of    Buihling    and    Loan    Associations.       2nd.     San 

Francisco,  1915.  The  Second  Convention  of  the  International  Congress 
of  Building  Societies  (as  known  in  Great  Britain)  ;  Building  and  Loan 
Associations,  Co-operative  Banks  and  Homestead  Associations  (as  known 
in  the  United  States):  Housing  C'ompanies  (as  known  in  parts  of  Con- 
tinental Europe) ;  Starr-Bowkett  Societies  (as  known  in  Australia  and 
New  Zealand);  and  Kindred  Associations  Throughout  the  World  held 
at  the.  ..  .Exposition  Grounds,  San  Francisco,  California,  July  30th, 
1915.  Cincinnati-Chicago,  American  Building  Association  News  Pub- 
lishing Co..  1915.  9(i  p.  HG2121.16  1915 
66  Iowa.  Laws,  Statutes,  etc.  Building  and  Loan  Laws  of  the  State  of 
Iowa,  From  the  Code  of  Iowa  and  Acts  Amendatory  Thereto,  Includ- 
ing Acts  of  the  36th  G.  A.  Comp.  by  Frank  S.  Shaw,  Auditor  of  State. 
Des   Moines,   R.    Henderson,   state   printer,    1915.      23   p. 

HG;2133.I8A4     1915 

66  Italy.     Direzione  Generale  Delia  Statistica.     SuUe  associazioni  cooperative 

in  Italia.  Saggio  statistico.  Relazione  presentata  dal  direttore  generale 
della  statistica  alia  Commissione  consultiva  suUe  instituzioni  di  previ- 
denza  e  del  lavoro  nolla  seduta  del  26  febraio  1890.  Roma,  Tip.  E. 
Botla,  1890.  90  p.  HD3502.A7   1890 

67  Tacobi,    Dorothea.      Die    gemeinniitzige    Bautatigkeit   in    Deutschland,    ihre 

kulturelle  Bedeutung  und  die  Grenzen  ihrer  Wirksamkeit.  Miinchen 
und  Leipzig,  Dunckcr  &  Humblot,  1913.  152  p.  (Staats-  und  sozial- 
wissenschaftlichc    Forschungeu.  .  .  .  Hft.    167) 

"Literatur  ":   p.   136-139.  HB41.S. 

68  Kansas.     Banking  Dept.     Annual  Report  of  the  Bank  Commissioner  Show- 

ing the  Condition  of  Building  and  Loan  Associations.  lst-19th,  1899/ 
1900-1917.     Topeka,  W.  Y.  Morgan,  state  printer,  1900-1905.  20  v.  in  M. 

HG2150.K2 

69  Kansas.      Laws,   St.itutes,  etc       Laws   of   Kansas   Relating  to   Building  and 

Loan  Associations,  1911,  Being  Chapter  78,  Session  Laws  of  1899,  with 
Amendments  and  Additions  Thereto.  Also  the  Law  Concerning  the 
Assessment  and  Taxation  of  Building  and  Loan  Associations.  Com- 
piled and  published  by  the  State  Banking  Department.  J.  N.  DoUey, 
Commissioner.     Topeka,   State   Printing  Office,   1911.      23   p. 

HC2123.K2A4     1911 

70  Keys,   C.    M.      How  to   Finance   the   Building   of   a   Home.      Philadelphia, 

issued  by  the  Ladies'   Home  Journal    [1913]    19  p.  TH148.K58 

71  Kilgore,  S[amuelJ   F.     Be  Your  Own  Landlord.     [Chicago,  1900.]     12  pp. 

72  Kramer,   Michel.      Instruction — Educution — Civilisation — Progres;    Examen 

des  Reformes  a  Introduire  dans  I'lnstruction  du  peuple.  Paris,  ( Impr. 
Cusset    et    Cie]    1870.      127    p.  LA692.K89 

73  Kromrey     Max.      Baugenossenschaften   und   der   Berliner   Spar-   und   Bau- 

verein..  ..Berlin,    H.    S.    Hermann,   1U03.      99  p.  HG2166.G8K9 

74  (Lawrence,   Wilber   E. ]    Manual   of  the   National   Building  and    Loan    Sys- 

tem of   Accounting.    [Chicago,   1893 J    50   p.  IIF668ti.B8L4 

76  Lanphear,  Albert  H.  Tables  for  the  Use  of  Building,  Saving  and  Loan 
Association*.     Atchison    [Kan.]    Printed   for   the  author,   1873.      3   P- 

HG2129.L3 

76  Lapham,  Martin  A.  ed.  Anotations.  Building  and  Loan  Association 
Laws  and  Methods.  Springfield,  Mo.,  Jewell  Pub.  Co.,  printers,  1895. 
)9  p  HG2183.M8.L8 

M8-n 


BIBLIOGRAPHY. 

77  Lopei,    Valencia    F.      Las    Cajas   de    Ahorros    Extranjeras    en    el    Re^men 

de  Las  Caras  Baratas  y  de  Prevision  Popular.  Madrid.  Tip.  de  la  Rev. 
de   Arch.,    Bibl.    y    Museos,"    1913.      15   p.  HG2123.L6 

78  Louisiana   Homestead   League.      Proceedings  of Annual   Meeting.     16th- 

22nd   New  Orleans,   La.    1907-1918.      7   v.   in   1.  HG2153.L8L8 

79  Lowe,    C.   J.      The   Building    Society    Movement.      A    Half-century    Record 

with    Special    Reference    to    the    Bristol    West    of    England    and    ;>outh 
Wales   Permanent   Building  Society.      (Founded   1850.)      Bristol,    W.   C. 
Hemmons,    1901.       138    p. 
"Prospectus":  p.   I-XIL 

80  McKay,    James    M.      The    Building    and    Loan    Movement    in    the    United 

States.  (In  American  Bankers'  Association.  Proceedings,  1910.  New 
York.      1910.      pp.    539-545.  HG1507.A5 

81  Macpherson,  Hector.     Co-operative  Credit  Associations  in  the  fjovince  of 

Quebec... Kingston,    1910.      96   p.  HC1665.C38N2 

88  Maine,  Banking  Dcpt.  Semi-annual  Statement  Showing  the  Condition  of 
the  Savings  Banks,  Trust  and  Banking  Companies,  and  Loan  and  Build- 
ing Associations.      I  Augusta,   1870-1917.)      450  in  36.  HG2411.M22 

83  Martin,    Henry,    of    New    York.      Co-operative    Savings    and    Building-loan 

Associations.      Their    Legal   Scope   and   Objects t^^^  ^^;ii;':;L 'xT^wi 

Ao   T)  H(j2133..^7M3 

84  Maryland.     Bureau  of  Industrial  Statistics.     Fourth  Annual   Report,  1896. 

tl89.')j    Baltimore:    King    Brothers,    1896. 
"Building   and    Loan   Associations,"   pp.    104159. 

85  Massachusetts.      Laws.    Statutes,    etc.      Statutes   of    the    Commonwealth    of 

Massachusetts  Relating  to  Co-operative  Banks,  Being  Chapter  114  of 
the  Revised  Laws.  Issued  from  the  Office  of  the  Board  of  Commis- 
sioners of  Savings  Banks.  Cor.  to  June  30.  1904.  Boston,  Wright  & 
Potter  Printing  Co.,  state  printers,  1904,  18  p.  HG2133.M4A4  1904 

88     Michigan.      Bureau   of    Labor  and   Industrial   Statistics.      Eleventh   Annual 
Report,   1894.      Lansing,   Mich.,   Robert   Smith  &  Co.,   1894. 
"Building  and  Loan  Associations,"  pp.   453-405.  HC107.M5.\2 

87  Department  of  State.  Report  on  Building  and  Loan  Associations.... 
■1900/02-1901/02.      Lansing,    Mich.,    1899-1917.      18    v.    in    l'-„^„,^„._ 

HU2150M5 

88  ...    Laws,   Statutes,   etc.      Laws   Relating  to   Building  and    I^an   Associa- 

tions. Comp.  under  the  Supervision  of  Frederick  C.  Martind.ile,  -Secre- 
tary of  State,  1910.  By  Authority,  Lansing,  Wynkoop,  Hallenbeck, 
Crawford   Co.,  state  printers,  1910.      IS  p.  HG2133.M5A4   1910 

89  Millar,    Thomas    J.,    Building    Society    Finance    and    Statistics.      A    Useful 

Handbook  for  Officials  and  Members,  Present  and  Prospective,  of  Build- 
ing Societies.     Edinburgh,  T.  T.   (lark,  1905.     102  p.  H02126.M64 

90  Missouri.     Bureau  of   Building  and   Loan   Supervision.     Annual   Report  of 

the  Supervisor  of  Building  and  Loan  Associations.  ...  1896/6-1917/18. 
Columbia,   Mo..  Press  of  E.   W..   Stephens,   1806-1918.     21   v 

HG2160.M8 

91  ....    Burc.iu   of   Labor   Statistics.      Fifteenth    Annual   Report.      1893.      Jef- 

ferson   City,    Mo.,   Tribune    Printing   Company.    1893. 
"Buibiing   and    Loan    Associations,"    pp.    109-274. 

92  Mutual  Benefit   Building  and   Loan  Associations:  their   History,   Principles, 

and   Plan   of  Operation....    Charleston.   Walker  and   James.    1852.   96  p. 

HG3126.M98 

93  (National    Federation   of    Remedial    I-oan    Association.-i]    Work    of   the    Re- 

medial   Loan   Societies,   1912-1918.    |  New   York,   The  Clover    Press]    1913. 

HG2066.N3 

94  Nebraska.       Department    of    Banking.       Annual    Report Showing    the 

Condition  of  the  Building  and  Loan  Aisociationn.  1*'9»/1900-^1917/18 
Lincoln.    Neb..    [lOOOiyOKl    17    v.  HG2150.N8 

96  Ijiws.   Statutri.   etc.      Law    Governing   the   Building   and   Loan    Asiio- 

ciatii.nn  of  the  state  of  Nebraska,  Passed  by  the  Twenty-sixth  Session 
of  the  Lrgnlaturr.  Taking  Effect  July  1.  1899.  Lincoln  Nebr..  J 
North  &   Co..   printer*.    1M09.    19   p.  HG2133.N2A5    1H09 

[485] 


APPENDIX. 


68  New  Hampshire.  Laws,  Statutes,  etc.  Abstract  of  the  Laws  of  New 
Haniiishirc  KelatinR  to  State  Banks,  Savings  Ba:.'  ,  Trust  Companies, 
and  BuiMinK  anil  Loan  Associations.  Rev.  by  the  Hoard  of  Bank  Com- 
missioners to  November  1,  181)9.  Manchester,  N  IL,  A.  E.  Clarke, 
public   printer,    IS'JO.      r.fi   p.  HG2420.N4A4      1899 

97  New   Jersey.      Bureau   of    Statistics   of    Labor    and    Industries.      Twentieth 

Annual  Report,  1897.  Trenton,  N.  J.  The  John  H.  Murphy  Publishing 
Co,    IbDS. 

"I'art  4:  Co-operative  Building  and  Loan  Associations  of  New  Jersey," 
pp.    121-510. 

Similar  reports  have  appeared  in  the  Annual  Reports  for  1890,  1892- 
1894,    1896. 

98  . . . .    Department    of    Banking    and    Insurance.      Annual    Report    of    the 

Commissioner  of  Banking  and  Insurance  Relative  to  Building  and  Loan 
Association,   1898/99-1916/1917.   Camden,   N.   J.,   19001902.   10   v.   in   15. 

HG2150.N5 

99  ....    Laws,   Statutes,  etc.      Laws  of  New  Jersey   Rclatint;  to   Building  and 

Loan  Associations,  1914.  Act  of  1903  with  Amendments  and  Additional 
Acts.  State  of  New  Jersey.  Department  of  Banking  and  Insurance. 
Trenton,    N.    J.,    MacCrellish    &    Quigley,    state    printers,    1914.      54    p. 

HG2133.N5A4     1914 

100  New  Mexico.    (Tex.)    Laws,   Statutes,  etc.     New   Mexico   Laws   Relating  to 

Banks  of  Discount  and  Deposit,  Savings  Banks,  Trust  Companies  and 
Building  and  Loan  Associations.  1910.  Compilation  prepared  by 
Charles  V.  SafTord....  By  authority.  Pub.  under  direction  of  Nathan 
Jaffa,  Secretary  of  New  Mexico....  Santa  Fe,  N.  M.  New  Mexican 
Printing   Company,    1910.      82    p.  HG242C.N6A3    1892 

101  New   South    Wales.      Registrar   of    Friendly   Societies.      Friendly    Societies, 

Trade  Unions,  Building  Societies  and  Co-operative  Societies  (Report 
of  the  Registrar )      [Sydney,   1898-1911]    i   v.  HD7250.A2N5 

102  New    York     (City).      Board    of    Estimate    and    Apportionment.      Building 

Zone  Plan  Board  of  Estimate  and  apportionment  of  the  City  of  New 
York.  Report  of  Committee  of  the  Whole,  July  18.  1916.  [New  York, 
M.  B.  Brown,   Printing  &  Binding  Co.,  1916.]   32  p.       TII25.N5A5  1916 

103  ....    (State)    Banking  Department.     Annual   Rei)ort  of  the   Superintendent 

of  Banks  Relative  to  Building  and  Loan  and  Co-operative  Savings  and 
Loan    Associations,    1890-1917.      Albany,    1801-1917.      24    vols. 

HG2150.N7 

104  The   News  and   Observer,   Raleigh,   N.   C.     Building  and   Loan   Association 

Section,  the  News  and  Observer.  V.  88,  No.  18;  June  6,  1S09.  R.-ileigh, 
N.   C,   1909.      16   p.  HG2153.N8N5 

105  Nolen,  John.     A   Good   Home  for   Every   Wage-earner;   Address.  ..  .at   the 

Twenty-fifth  Annual  Meeting  of  the  United  States  League  of  Local 
Building  and  Loan  Associations,  Boston,  Mass.,  July  24-26,  1917. 
Cincinnati,  O.,  American  Building  Association  News  Publi.>;hing  Co., 
1917.     12  p.  HD7293.A3N65 

106  North    Carolina.      Laws,    Statutes,    etc.      Insurance    Laws   of   the    -State   of 

North  Carolina,  1911....  James  R.  Young.  Insurance  Commissioner. 
Raleigh,   E.    M.    Uzzcll   &   Co.,   state   printers,    1911.      lO.'i  p. 

Including  laws  relating  to  insurance  and  .-ill  laws  governing  and 
regulating  insurance  ccniijanies  and  fraternal  orders,  and  all  bond  and 
investment    companies    and    building   and    loan    associations. 

"....Amendments  and  Additions  t')  Insurance  Laws,  Enacted  by  the 
General   Assembly,    1913"    (49    |21    p.)    inserted. 

....Amendments  and  Additions  to  Insurance  Laws  Enacted  by  the 
General  Assembly,  1918.  James  R.  Young,  Insurance  Commissioner. 
[Raleigh,  N.  C,  Edwards  &  Broughton  Printing  Co.,  1913]  49  p.  [With 
Insurance   Laws  of   the   State  of   North   Carolina,   1911,    Raleigh.   1911.] 

HG8521.N8   1911 

107  Ohio.     Bureau  of  Building  and  Loan  Associations.     Annual   Report  of  the 

Inspector  of  Building  and  Loan  Associations.  .  .  .1891-1917/18.  Columbus, 
1892-1918.      26    v.  HG2150.O3 

108      Laws,   Statutes,   etc.      Laws  of   Ohio   Relating  to   Building  and   Loan 

Associations,  1908.  Columbus,  O.,  F.  J.  Heer,  state  printer,  1908. 
29    p.  HG2133.03A4     1908 


[486] 


BIBLIOGRAPHY. 

IW     Ontario.     Laws,  Statutes,  etc.     Provisions  Relating  to  Terminating  Shares 
in    Loan    Corporations,    to   Take    Effect    on    the    10th    September.    190.S. 
Printed    by   order   of   the   Legislative   Assembly    of    Ontario.  ..  .Toronto, 
L.    K.    Kameron    1903.      8    p.  HG213o.C34A4     1903 

110  ....     Registrar    of    Loan    Corporations.       Ix>an    Corporations    Statements, 

Being  Financial  Statements  Made  by  Building  Societies,  Loan  Com- 
panies,     Loaning      Land      Companies,      and      Trust      Companies.      1897- 

1917.  Toronto,  1898-1918.     20  v.  in  19.  HG3156.C406 

111  Oregon.      Laws,    Statutes,    etc.      Oregon    Statutes   Governing   Building  and 

Loan  and  Savings  and  Loan  Associations  as  Amended  by  Chapter  227 
of  the  General  Laws  for  191. ^,  Enacted  by  Twenty-eigth  Legislative 
Assembly,  Effective  May  22,  1915,  Pub.  by  the  Corporation  Department 
of  the  State  of  Oregon.  Comp.  by  R.  A.  Watson.  Corporation  Com- 
missioner.      ISalem,    Or.,    State    Printing    Department.    1915]     15    p. 

HG2138.07A5     1915 

112  Paine.  Robert  T.     Co-operative  Banks.     How  Many  Shares  to  Issue?     How 

Many  Shares  to  Mature?  Boston,  Rand,  Avery  Company,  printers.  1887. 
12  p.  HG2126.P14 

113  ....    Homes   for   the    People.      A    Report.  ...  Road September    9,    1881. 

Boston,    Tolman   &    White,   printers,    1882.    19    p. 

Reprinted  from  the  Journal  of  Social  Science,  No.  XV.       HG212C.P18 

114  Paine,    Willis    S.    ed.      The    Laws   of   the   State   of    New    York    Relating   to 

Building  Associations:  Being  the  Statutes  Governing  the  Corpor.itions 
Variously  Known  as  Building,  Mutual  Loan,  Accumulating  Fund,  Co- 
operative Savings,  and  Homestead  Associations,  with  Annotations  Ap- 
plicable to  these  Corporations  Generally.  New  York,  L.  K.  Strouse 
&   Co.,    1889.      94    p.  HG2133.N7P.'? 

116  Pennsylvania.     Banking   Department.     Annual   Report.      Harrisburg,   1893- 

1918.  34   V.   in   45. 

Pt.    IL      Building   and    Loan    Associations.  HG2411.P4 

118      ....    Department  of   Internal   Affairs.      Part   III    Industrial    Statistics,    vol. 
21,   1893.      Clarence    M.    Busch,    State  printer  of   Pennsylvania,   1894. 
"Statistics   of   Building   and    Loan    Associations,"    1A-515A 

117  ....    Laws,    Statutes,    etc.      Acts   of    Assembly    Relating    to    and    Affecting 

Building  Associations  in  Pennsylvania;  comp.  by  M.irtin  H.  Stutzbach 
for  the  Building  Association  League  of  Pennsylvania.  [Philadelphia.] 
1902.      63    p.  I1G2133.P4S8 

118      Laws  1907;   1909;   1911   of  the  Commonwealth   of  Pennsylvania, 

Relating  to  Corporations  Coming  Under  the  Supervision  of  the  Bank- 
ing Department.  Being  a  Supplement  to  the  Digest  Issued  by  t!ie  Com- 
missioner of  Banking  in  1905.  Harrisburg,  C.  E.  Aughinbaugh,  printer, 
1011.      04   p.  HG242G.1'4A3      1911 

119  Perpetual    Building  and    Loan   Association,    Philadelphia.      Story    of    Build- 

ing and  Loan  Associations.  Philadelphia,  Perpetual  Building  and  Loan 
Association,   1914.      8   p.  HG2152.P4 

120  Peters,   Edward  T.     Co  operative  Credit  Associations  in   Certain    European 

C'ountries  and  Their  Relation  to  Agriculuiral  Interests.  ...  Washin^on, 
Govt.  Print.  Off.  1892.  117  p.  (U.  S.  Dept.  of  Agriculture.  Division 
of    Statistics.      Report,   misc.    ser.,    3.)  IIG2041.P5 

HI  Philadelphia  Social  Science  Association.  Papers  on  Building  Associations 
....Reprinted  from  the  Penn  Monthly  for  July  and  August,  1876. 
Philadelphia,  Philadelphia  Social  Science  Association  llhrcl  29  p. 
(Philadelphia  Social  Science  Association.  Papers  read  before  the  Asso- 
ciation; IIG2152.P6 

122  Pranard,  Charles.  Etude  Sur  Les  Building  Associations  Amdricaines.  .  .  . 
Paris,    A.    Rousseau.    1907,      286    p. 

"Ouv){ages  a  Clonsulter";  p.  6-8.  HC2151.P7 

128  Oureniland.  Registrar  of  Friendly  Societie.i  Report  of  the  Registrar 
of  Friendly  Societies,  Building  Societies,  and  Trade  Unions.    Isf-6th,  8th- 

21»t,    25th-29th.       Brisbane     [1886] 1891,     1893-1900,     1911   1915.       26 

V.   in   7.  HD7250-A2Q3 

124  Reeder,  David  H.  The  Agents'  Handbook.  [Baltimore,  Md.,  Fleet,  Mc- 
Ginlcy  fit  Co.,   printcm,   18961    20  p. 

"Setting    forth....  how    to    successfully    conduct    the    business    of    a 
building  and   loan  agency;"   p.    U.  HG2120.R3 

1 487  J 


APPENDIX. 

195  Rhode  Island.  Laws,  Statutes,  etc.  L.tws  of  Rhode  I.sland  in  Relation  to 
Banks,  Institutions  For  SaviiiRS,  nnd  Co-opcrntive  Duilding  A<<si)ciations. 
1898.    Providence,   R.    I.,   E.    L.    Freeman   4   Sons,   printers,    1809.      49  p. 

nG2426.R4A3 

126  Robinson,    J|amcs)    W.      Robinsoniaii    nuililinR-I.oaii    Interest    Tal)les.      A 

Complete  Reference  Book  for  tlie  l.'.sc  of  BuildiiiR-loan  and  Co-operative 
Bank  Accountants  and  Ageuts.  Bo.slon,  Mass.,  J.  W.  Rohinsoti,  1893. 
83  p.  5th  ed.      1904.     206  p.  HG1630-R65 

127  ....    Robinsonian    F.qual    Monthly    Payments.  ...  Required   to    Pay   a    Loan 

of   $100.00   in    Varyinu   I'eriod.s   from   One   Month  to  Twenty-five   Years, 

and   at   Rates  V'aryin^   from   One   Per  Cent  to  25  Per  Cent   per  Annum. 

kFor  use  of  Building  and  Loan  Associations,  etc.  Melrose  Mass.,  J.   W. 

obinson.      1892.)    10   p.  HG1030.R665 

128  ....    Robinsonian   Interest   and    Maturity  Tables   for  the   Use   of   Co-opera- 

tive Banks  and   Building  and    Loan  Associations.  Boston,   Mass.,  J.   W. 

Robinson,   1894.      -O   p.  HG1630.R68 

129  ....    Robinsonian   Table   of    Rates    Earned   by   a   Loan,   Also    Showing  the 

Rates  Actually  Paid  by  a  Borrower  in  a  Building  Loan  Association. 
Boston,    Mass.,    J.    W.    Robinson,   author   and    i>ub.    [1894]    7    p. 

HG1036.R69 

130  ....Comp.      Robinsonian    Withdrawal    Values,    and    Rates    of    Simple    In- 

terest Earned.  Boston,  Mass.,  J.  W.  Robinson,  author  and  pub.  [1894] 
7   p.  HG1636.R7 

131  Rosenthal,    Henry    S.      Building,    Loan   and    Savings   Associations,    How  to 

Organize  and  Successfully  Conduct  Them.  .  .  .3rd  ed.  Rev.  and  enl. 
Cincinnati,  Chicago,  American  Building  Association  News  Co.,  1911. 
425    p.  HG2126.R8 

132  Russell    Sage    Foundation,   New   York.    Library.      Co-operative    Credit.... 

New  York,  The  Russell  Sage  Foundation  Library  [1914]  7  p.  (Bul- 
letin  No.  5  June,  1914.)  Z881.N667  No.  6 

133  Schulze-Delitzsch,    Hermann   and   F.    Schneider.      Die   Genossenschaften   in 

einzelnen  Gewerbszweigen.  Praktische  Anweisung  zu  ihrer  Griindung 
und  Einrichtung.   Leipzig:   Ernst  Keil,   1873.   408  p.  HD6394.S3 

134  Scratchley,  Arthur.     Industrial  Investment  and  Emigration,  Being  a  Trea- 

tise on  Benefit  Building  Societies,  and  on  the  General  Principles  of  As- 
sociations for  Land  Investment  and  Colonization.  ..  .2nd  ed.  much  enl. 
London,    J.    W.    Parker,    1851.      309    p.  HG2126.S88 

135  Sharp,  Robert  W.     The  Chattel   Mortgage  Loan  Business,  the  Disease  and 

the   Remedy.      [Newark,   N.   J.]    1910.     161   p.  HG2066.S5 

136  Siegert,  Rudolf.     Die  Wohnungsfiirsorge  im  Grossherzogthum  Hesscn.... 

Giesen,  A.   Topelmann.      1907.    151    p. 

■•Literaturverzeichnis;"    p.    148-151.  HD7339.A3S2 

137  Smith,  Titus  K.     Co-operation.     How  Every  Man  May  Become  the  Owner 

of  His  Home  as  Easy  as  He  Can  Pay  His  Rent.  New  York,  Concord 
Co-operative   Printing   Company,   1887.     31    p.  HG2128.S6 

138  Smith,  W.  Golin  G.     Building  Societies'  Accounts.     Specially  Adapted  for 

Permanent  Societies  and  Societies  Using  Interest  Tables.  London, 
Gee  &  Co.,  1903.     104  p.      C'The  Accountants'   Library;"   vol.   XXV.) 

139  Stone,    William.      A    Practical   Treatise   on    Benefit    Building    Societies.... 

also,  the  Principles  and  Practice  of  Tontine  Building  Companies,  Free- 
hold Land  Societies,  etc.  and  the  Law  Relating  to  Those  Societies  with 
the  Statutes  and  Cases  to  the  Present  Time;  also  Rules,  Forms,  etc. 
London,   W.    Maxwell.    1851.      312   p.  HG2126.S86 

140  Strauss,   Paul  and  Charles  B.iulez.      Habitations  a  Bon   Marche;   Commeij- 

taire  Juridique  de  la  Loi  du  12  Avril  1906  et  Guide  Pratique.... 
Paris,   E.    Flammarion    [1907 J    380   p.  HD7338.A3S8 

141  Sundheim,   Joseph    H.      The    Law   of    Building    and    Loan    Associations    in 

Pennsylvania.  Philadelphia,  Pa.,  Smith-Edwards  Company  [1913] 
204    p.  HG2133.P4S9 

148  Tennessee.  Treasurer's  Office.  Annual  Report  of  the  Condition^  of  the 
Building  and  Loan  Associations  Transacting  Business  in  the  State  of 
Tennessee.  1895-date.  Nashville;  Press  of  Brandon  Printing  Co.  1896- 
1»19.     14   V.   in  12.  HG2160.T2A2 

[488] 


BIBLIOGRAPHY. 

143  Thompson.  Charles  N.     A  Treatise  on  the  Law  of  the  Building  and  Loaii 

Associations,  with  Forms.  2nd  ed.  Chicago,  Callaghan  &  Co.,  1899. 
832    p. 

144  Thornton,  William  VV.     The   Law  Relating  to  Building  and  Loan  Associa- 

tions, with  Forms  and  Suggestions.  Albany,  N.  Y.,  M.  Bender,  1898. 
950    p. 

145  Tompkins.  Dlaniel)   A.     A  Plan  to  Raise  Capital  for  Manufacturing;  with 

Appendix  on  Mechanical  Education.  1st  ed.  Charlotte,  N.  C,  1900. 
62  p. 

146  Towndrow,    [Thomas) Suburban    Homes,    How    to    Obtain    Them.      Town- 

drow's  New  and  Comprehensive  I'lan  of  Association  by  Which  Persons 
of  Limited  Means  Mav  .Acquire  Desirable  Suburban  Homes.... New 
York,    T.    Towndrow,    [1875]    55    p.  HG2128.TG 

147  Truesdale,   George.     .V   Permanent   System   of  Incorporation,   for   Building, 

Mutual  Loan,  and  Accumulating  Fund  Associations.  [Rochester.  N.  Y., 
1882.)    11    p.  HG2128.T8 

148  U     S     Bureau   of    Labor.      Building  and   Loan   Associations.      Washington, 

Govt.  Print  Off.,  1S94.  719  p.  {.\nnual  Report  of  the  Commissioner 
of   Labor,   yth,    1893.)  ^ 

Issued  also  in  the  Congressional  Series,  No.  3227,  as  House  ex.  doc. 
209.    53rd    Cong.,    2nd    Sess. 

"General  Legislation  Relating  Especially  to  Building  and  Loan  Asso- 
ciations;"   p.    493-713.  HD8051.A3 

149      Bulletin,    No.    21,    March,    1899. 

Second  Annual  Report  on  the  Building  and  Loan  Associations  of  Con- 
necticut. ...  Eighth  Annual  Report  on  the  Building  and  Loan  Associa- 
tions of  New  York.  ..  .First  Annual  Report  on  the  Building  and  Loan 
Associations    of    Wisconsin.  HD8051.A5 

160      Bulletin.      No.    43.    Nov..    1902. 

State   Reports  on   Building  and   Loan   Associations;    New   York. 

HD8051.A5 

151      Bulletin.      No.   30,   Sept.,   1900. 

State  Reports  on  Building  and  Loan  Associations.  C  alifornia,  Connec- 
ticut,  Iowa,   Michigan,   New    York.  HD8051.A5 

152      Bulletin.      No.    33,   March,   1901.  . 

State  Reports  on  Building  and  Loan  Associations;  California,  New 
Y„j.|j  HD8051.A5 

153      Bulletin.      No.    55.    Nov.,    1904.  ^      r-    .x,    ,., 

Building  and   Loan   Associations   in   the   United   States,   by   ti.    W.    VV. 

Hanger.  HD8051.Ao 

164      Index  of  All   Reports   Issued   by   Bureaus  of   Labor   Statistics  in 

the   United   States,  prior  to   March   1,    1902.      Prepared   under  the   Direc- 
tion of  Carroll   D.   Wright.      Washington,   Gov.    Print.   Off.,    1902.   2;i7    pp. 
Contains    references    of    building    and    loan    assocuitions    contained    in 
the    various    state    reports. 

155  United  State.-i  League  of  Local  Building  and  Loan  Associations       Proceed- 

ings of  the  Annual   Meeting   189:M915.      22   v.   in  6.  HG2151.A3 

156  Vermont.       Banking    Department.      .Annual    Report.       Rutland,    19071916. 

jQ    y  MG2411.V4 

157      Laws,  Statutes,  etc.  General  Laws  of  the  State  of  Vermont  Relating  to 

Savings  Institutions,  and  Other  Corporation.s  under  the  Supervision  of 
the  Bank  Commissioner.  Comp.  by  the  Secretary  of  State.  1911. 
Essex    Junction,    Vt.       Roscoc    Printing    House    [19111    70    p. 

HG1902.V5A4      1911a 

168  Vossbcrg,    Walter.       Die     deut.iche     Baugcnossenschafts     ■     Rfw^K""^:.- v,o 

Halle  a.   S.,   190.'-,.      1905.     241    p.  lIG21fi6.G3V8 

169  Walker  Lithographing  and  I'rinting  Co.,  Dayton,  O.,  pub.  Constitution  and 

By  laws  for  a  Dayton  Plan  Building  and  Loan  Association  .Dayton 
O.,  The   Walker   Litho.   and   Printing  Co.    [18951    16   p.  II(.2128.W3 

180  Warr,  J.  W.  Comp.  Warrs  Interest  Tables,  Especially  Adapted  to  the 
Use  of  Building,  Savings  and  Loan  Associations.  Molinc,  III.,  1  low- 
man    Publishing   Company,    printers   and    binders,    18WI.      8    Pj^....  «,. 

M891 


APPENDIX. 

161  WillouRhby,     William     F.       BuiWing     ami     Loan     Associations,      f  Boston, 

Wright  &  Potter  Printing  Company,  19001  84  p.  fMonograrlis  on 
Amrriran  Social  Economics.  Eilitor:  II.  B.  Adams.  ..  .Associate  Editor: 
Rirli.Trtl   Waterman,  jr.   XX.  ] 

"Bibliographic    Note:"   p.    33-S4.  H.-^LM?   No.    11 

162  Wiltzius,    Eugene.      Illustrations   and    Demonstrations   of  the   Discovery   of 

the  E.  W.  Check  Methods,  Check  Figures  and  Check  Figure  Groups.... 
Presenting  an  Absolute  Prodf  for  the  Correctness  of  the  Shares,  State- 
ments of  Mutual  Loan,  Building  and  Savings  Associations.  [La  Crosse, 
Wis..  The  Inland  Printing  Company,   19151    C,2  p.  HF5C80.B8W.'i2 

163  Wisconsin.      Bank    Examiner's    Office.      Annual    Report    of    the    Bank    Ex- 

aminer of  the  Condition  of  the  Loan  and  Building  Associations  of 
Wisconsin.      Madison.    Wis.,    18981917.      19    vols.  HG2ir)0.W6 

164  ....   Bureau  of  Labor,  Census  and  Industrial  Statistics.     Seventh  Biennial 

Report,  1895-1806.  Madison,  Wisconsin:  Democrat  Printing  Co.,  1895. 
Pt.   7.      Building  and  I^an   Associations:   pp.   50G-539.  HC107.W6A2 

165  Wisconsin.      Laws,    Statutes,   etc.      Laws   of    Wisconsin    Relating   to   Build- 

ing and  Loan  Associations,  Chapter  732,  Laws  of  1912.  ..  .as  Amended 
in  1915  and  1917.  Appendix  Containing  Laws  for  the  Regulation  of 
Investment  Companies,  Chapter  219;  Laws  of  1905....  Comp.  Aug.  1, 
1917.  ..  .State  Banking  Department.  Madison,  Wis..  Democrat  Print- 
ing Company,   state   printer,   1917.   23   p.  HG21S3.W6A4    1917 

166  Wolff,    Henry    W.       Cooperative    Banking,    Its    Principles    and    Practice, 

with  a  Chapter  on  Co-operative  Mortgage-Credit.  •  London,  P.  S.  King 
and  Son,   1907.      301   p.  nG2126.W85 

167      A  Co-operative  Credit  Bank  Handbook.  London,  P.  S.  King  and  Son, 

1909.      74    p.  HG3729.G8W6 

168  ....    People's  Banks;   a   Record   of   Social  and   Economic   Success.   3rd   ed. 

newly  rev.  and  enl.     London,  P.   S.  King  &  Co.   1910.     587  p. 

HG2041.W8 

169  Wood,    Clark    J.      The    Road    to    Prosperity,    via    the    Artisans',   the    State 

Mutual,  the  Artisans'  No.  2,  the  No.  2  Republic,  the  No.  2  Trades- 
men's, the  Republic,  the  Assistance,  the  No.  3  Tradesmen's  and  the 
No.  2,  Assistance  Building  and  Loan  Associations  of  Philadelphia. 
Philadelphia,   Dunlap  &  Clark,  prs.    [1888]    20  p.  IIG3626.P5A7 

170  Workingmen's  Assembly.     Washington,  Co-operative  Building  Associations. 

Words  of  Caution  to  Our  Fellow  Workingmen.  [Washington,  1867] 
7   p.  HG2152.W6 

171  The  World  Almanac  and  Encyclopedia  1919.     The  Press  Publishing  Com- 

pany,   New   York.    1918.  AY67.N6W7 

Building   and    Loan    Associations,      p.    417. 

172  Wrigley,   Edmund.      How  to   Manage  Building  Associations.      A   Director's 

Guide  and  Secretary's  Assistant.  Srd  ed.  rev.  and  enl.  Philadelphia, 
J.   K.    Simon,    18S0.    233   p.  HF2126.W94 

173  The  Workingman's  Way  to  Wealth;  a  Practical  Treatise  on  Build- 
ing Associations:  What  They  Are  and  How  to  Use  Them.  5th  ed. 
Philadelphia,  J.   K.   Simon,   1872.      108  p.  HG212fi.W93 

174  Wurtzburg,    Edward    A.      The    Law    Relating   to    Building    Societies:    with 

Appendices  Containing  the  Statutes,  Regulations,  Act  of  Sederunt, 
Forms  of  Annual  Account  and  Statement,  and  Precedents  of  Rules  and 
Assurances.      4th   ed.      London,   Stevens  and   Sons,   1902.      513   p. 

175  Young,    James    R.      Building   and    Loan    Associations:      How   to    Help   the 

Community  and  How  Supervision  Helps  Them.  Address  before 
the  Annual  Meeting  of  the  North  Carolina  Building  and  Loan  League, 
New  Bern,  N.  C,  June  20,  1911.  (Raleigh,  E.  M.  Uzzell  &  Co.,  state 
printers    and    binders,    1911]    11    p.  HG2152.Y6 

176  Young,  M.  H.  V.     Young's  Plan  and  System  of  Organizing  and  Operating 

Building-loan  and  Savings  Associations.  [Racine,  Wis.,  1893]  17 
numb.    1.  HG2128.Y7 

177  Zentralstelle     fiir     Arbeiter  -  Wohlfahrtseinrichtungen.       Die     Beschaffung 

hypothekarischer  Darlehen  fur  Baugenossenschaften.  Berlin,  C.  Hey- 
mann,  1908.  164  p.  (Schriften  der  Centralstelle  fur  Arbeiter  -  Wohl- 
fahrtseinrichtungen. No.  88.)  HD7707.Z4  No.  88 

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Articles    in    Periodicals. 

178  1888     Jenks,  J.   W.     Report  on  Savings  Banks  and  Building  Associations. 

Journal  of  Social  Science  (New  York),  Dec.  1888.  No.  25,  p. 
125184.  H1.J7,    No.    25 

170  Sanborn,  F.  B.     Co-operative  Building  Associations.     A  Report  from 

the  Special  Committee  on  Provident  Institutions,  Read  at  Sara- 
toga. Sept.  7.  1SS8.  Journal  of  Social  Science  (N.  Y.),  Dec. 
ISSS,   No.   25,   p.   112-124.  H1.J7,   No   25 

179  1889     Dexter,    Seymour.       Co-operative    Savings    and    Loan    Associations. 

Quarterly   Journal   of   Economics,   April    1889,    v.   3:    315-335. 

HBl.Q3,v.3 

180  Linn,  W.  A.  Building  and  Ixjan  Associations.     Scribner's  Magazine, 

June,   1SS9,   v.   5:    700-T12.  AP2.S4,   v.    6 

181  1892     Dexter,    Seymour.      Building   and    Loan   Associations   as    Related   to 

the  Future  Political  and  Social  Welfare  of  the  United  States. 
American   Journal   of   Politics,   Dec.   1892,   v.   1:    622-627. 

H1.A5,  V.   1 

182  1893     Ludlow,    John     M.       Building    Societies.       Economic    Review,    Jan. 

1893,    V.    3:    64-86.  HB1.E4,    v.    3 

183  Building   Society   Mischiefs.    Spectator,   Jan.   21,   1893,   v.   70:    72-73. 

AP4.S7,v-70 

184  1895     Building  and  Loan  Associations.     Lend  a  Hand,  June  1895,  v.  14: 

l.'')0-455.  nVl.LG,vl4 

185  1896     Building  Associations  and  Savings  Banks.    Gunton's  Magazine,  Apr. 

1896,   v.    10:    241-251.  111.09.    v.    10 

186  1897     Corbin,  William.     Building  and   Loan  Associations.  What  They  Are 

Doing  in  California.  Overland  Monthly,  June,  1S97.  ser.  2, 
v.    29:    671-674.  AP2.09,   v.    29 

187  1900     Local    Building    and    Loan    Associations.       Charities    Review,    Nov. 

1900,   V.    10:   3S7-388.  HV1.C5,   v.    10 

188  1901      Sanborn,    Franz    B.       Home    Building    for    Workingmen.      Building 

and   Loan    Herald,   Aug.    1901,   v.    13:    240-248. 

HG2121.B8,  v.   13 

189  1903     Tompkin,  D.  A.     Working  People's  Homes.     What  is  Being  Accom- 

plished by  American  Building  and  Loan  Associations.  Cassier's 
Magazine,    Mar.    l'J03,   v.   23:   600-614.  TA1.C34,   v.   23 

190  1904      ....    Building  and   Loan  Associations.     The  Means  for  Co-operative 

Savings  by  Southern  Working  People.  Manufacturer's  Record, 
Aug.  25,  Sept.,  29,  1904,  v.  46:  124126,  150-152.  176-178,  203- 
204,   227-228,    255-256.  FS1.M3,    v.    46 

191  1907     Nicholson,  A.  T.     How  to  Build  a  Home  Without  Capital.     Country 

Life   in    America,   Supplement,   Jan.    1907,   v.    11:    ft'i. 

S1.085,  v.  11  Suppl. 

192  1908      Effect  of    Mortc;age   Receipts   Under   English    BuiMing   Society   Law. 

Solicitor's   Journal,    June    0.    1908.    v.    52:    546-5J7. 

193  State    Aid    for    Belgian    Workingmen's    Home.         Harper's    Weekly. 

Aug.    15,   1908,   V.   52:   31.  AP2.H32,  v.   63 

194  1909     Ncttleford,    John    S.       Ifarl'orne    Tenants:    an    Example    of    English 

Co-operative  Estate  Development.  Survey,  Apr.  3,  1909.  v.  22: 
54-59.  nVl.C4,   v.   22 

American  Review  of  Reviews,  June,  1909,  v.  30;  734-735. 

AP2,R4,v.39 

195  Building  Societies  as  Mortgages  "In  Possession."     Law  Times,   May 

22,    1909.    v.    127:    75.70. 

199  1009  Children,  .Savings,  and  Homes.  American  Review  of  Reviews, 
Nov.   1900,  V.   40:   030.  AP2.R4,  v.   40 

107  1910  Imposition  of  Fines  on  Members  of  Building  and  Loan  Associa- 
tions for  Failure  to  Make  Prompt  Payments.  Central  Law  Jour- 
nal,  Oct.    14,    1910,    V.    71  :    256. 

198  1911  Neighborhood  Lenders.  American  Review  of  Reviews,  Feb.  1911, 
V.    43:    247-248.  AP2.R4,    v.    43 

linii 


APPENDIX. 

109  Frankfl,   L.    K.      Insurance   and    Home    Building.      Survey.   June   S, 

1911,   V.    26:    350-359.  HV1.C4,   v.    80 

200  Nettleford,   John    S.     Town   Planninu   and   Co-Partnership   HousinK- 

Survey.  June  3.  1911.  v.  26:   370  373.  HV1.C4.  v.  26 

201  1012     Bailey.  F.     Waste  in  Borrowing  on  Real  Estate.     American  Reviews 

of    Review.s.    Jan.    1912.    v.    45:    88-89.  AP2.R4,    v.    46 

202  The    Position   of    Building    Societies.      Law   Journal,   Jan.    20,    1912, 

v.    47:    31-32. 

303  1013  Bentinek,  H.  Co-partnership  in  Land  and  Housing.  Contemporary 
Review,   May.   1912,  v.    103:   620-625.  AP4.C7,   v.   103 

204  Small   Investors'   Money   for   Home  Building.     World's   Work,   May, 

1913,  v.  26:   31-33.  AP2.W8,  v.   26 

805  Relation   of    Building   and    Loan   Associations   to  the   Housing   Prob- 

lem.     American   City,    Sept.,    1913,   v.    0:    250-261. 

HT101.A5,  V.   9 

206  1914     The    Birkbeck     Bank     Liquidation.       Solicitor's    Journal,     Feb.     21, 

1914,    V.    53:    298-299. 

207  National    Building-loan    Bank    for    Italy.      American    Review   of    Re- 

views,  July,    1914,    v.    50:    92-93.  AP2.R4    v.    50 

208  Kellogg.    E.   L.     To   Increase   Efficiency  in   Home   Building.    Survey, 

Oct.   17,   1914,   v.   33:   60-07.  HV1.C4,   v.   33 

200  Mistaken    Payments.      Law   Journal,   Nov.   28,   1014,   v.    49:    648-049. 

210  1015     Ham,    Arthur    H.      Credit    Unions    and    Their    Relation    to    Savings 

and   Loan  Associations.      Economic   World,  Aug.   21,   1915.  v.   96: 
235-238.  HG8011.M3,   v.   90 

211  1916     Building    Societies    and    Mortgage    Interest.      Law    Times,    Jan.    29, 

1916,    V.    140:    276. 

212  Marfarlane,    Peter    C.      Home    Builders   of   the   Cascades.      Collier's 

Weekly,  Apr.  1.  1016,  v.  57:  22-23.  AP2.C65,  v.  67 

213  Hedrick,   W.    O.      Building   and    Loan   Associations   the    Solution   of 

the    Rural    Credit    Problem.      Scientific    Monthly,    May,    1916,    v. 
2:    453-459.  Q1.S817,   v.   2 

218  a  1917  Resources  and  Operations  of  Building  and  Loan  Associations  in 
the  United  States.  Economic  World,  Aug.  4,  1917,  n.  s.  v.  14: 
159.  HG8011.M8,  V.  14 

214  1918     Thcis,   H.  T.     If  You  Are  Thinking  of  Building  a   House.     Amer- 

ican  Magazine,  Aug.,  1918,  v.   86:   106108.  AP2.A346,  v.  86 

215  Unmistakable   Evidence  of  Thrift.      Literary   Digest,  v.    58,   Sept.   7, 

1918;   84.  AP2.L58,   v.    68 

216  1919     Moorehead,   J.    R.    Financing   of    Home    Building.      American    Lum- 

berman, Apr.  10,  1919.     No.  2202:  48-40.  TS800.A6  No.  2202 


[492] 


GENERAL  INDEX. 

For  Reference  to  Figures,  Forms,  Tables.  See  Aleo  Special  Index. 


PACE 

Accident    Insurance 157 

Accounts,    False 264ff 

"Act  of  March  3,  1917" 80 

Advertising    128,  424-434 

Technical  data  on  printing.. 430-434 

Agents  and  Contracts 215ff 

Alabama   71 

American     Building     Association 

News    22-26,50.76,202 

American    Deposit    and    Building 

Association    33 

Amortization   Loan 42,  123 

Application  for  Loans 176ff 

Appraisement    178,  ISOff 

Appraisers,    Ejcpert 188 

Assets  and  Liabilities 277fr 

Assets,  Quick 277flf 

Assignment  of  Stocks 175ff 

Assistant    Secretary 197 

Atlantic  City.  N.  J 51 

Atlantic  Coast 8 

Attorney    126,  128 

Appointment   of 201ff 

Compensation  of 201ff 

Duties  of 201«f 

Report   *08 

Auditing — 

Methods    251.200  281 

Necessity  and  object  of.  ...242  266 

Purposes    of 246ff 

Qualifications  for 254 

Auditing    Committee 164,  253 

Auditor    252flf.  257,  258 

Certificate  of 279 

Compensation    259 

Report  of 278.  279 

Australia    80,  81 

Austria   5,  31,  71 

Balancr    Sheet 851fr 

Baltimore,  Md 18.  85 


PAGE 

Banks 48,76 

Co-operation  with 140 

Federal  Reserve 44 

BeardiUy,  Eliaj  J 418 

Bellefontaine   B.  &  L.   Ass'n   vs. 

McMaken 78 

Blankbooks    128 

Blanks,  Specimen 891ff,  405-416 

Board  of  Trade 130,  140 

Bohemian  League  of  Chicago....   62 

Bonds 73,  74,  86,  227 

City 174,227 

Officers 206,395 

Surety .207 

Book  Account 406 

Book,    Cash 23« 

Book  Value 163 

^ooks  and  Blanks 405-416 

Books,  Care  of aOOff 

Books,    Necessary 412ff 

Borrowing  Members — 

154,  160ff,  173,  176 

Duties  of 170fl 

Rights   of 10»ff 

Borrowing  Money 220ff 

Boston,  MaAS 34,  35 

Bradford,  Weavers  of 4 

British  Guiana 31 

Brooklyn,   N.   Y 33 

And  Georgia  Case 38.  88 

Broum.  Mickofl  J 372 

Building  Associations — 

7,  9  28,  64,  68 
Advantages  of — 

15,  10  18,  36-38,  63 

Aim  and  purpose  of 10 

As  clearing  house 76 

Definition   of 10 

Fjuienlial  features  of 11,  96 

Fundanienlal  inteiest  of 808ff 

riow  lo  organise 146-148 


14931 


GENERAL  INDEX. 


rACK 

Law   of S3 

ly^agucs    4758 

ManaRfineiit   of ....    54 

Mctnbcrshtp  increasinj ■IS 

Methods  of  operation 89,  40 

Name  and  title  of t,  10,  14 

Origin    of It,  18,  39,  r>9 

Powers  and  liabilities.  ...  .214-220 

Publicity  of 46 

Result.*  of 36-46 

Safety  of 155,  159 

.Supplies    4l2ff 

Burke,  Addvscn  B 83 

Building  Tradesmen  as  members. .129 

Burns,   Robert,  on  Saving 15 

By-I^ws — 

135,  136,  151,  1T3,  220,  453-479 

Calendar,  Perpetual — 

301,  303-304,  316  321 

California    6,  51,  121 

Canton,   Ohio 50 

Capital  Stock. 131-183,  14511 

Capital  Stock  Institutions 37 

Cash   Balance,   Proving 266ff 

Cashbooks    .236,  273 

Caster,  Jesse  V H 

"Central      Building     and      Loan 

•   Ass'n  vs.  Rowland" 78 

Certificate  of  Deposits . 151 

Certificate  of  Paid-up  Stock.. 147,  149 

Cei'tificate  of  Record 228,  229 

Chamber  of  Commerce 130,  140 

Charleston,  S.   C 34 

Charter  Fees 81,  131 

Charters    92,219 

Chicago,   Illinois 35,48,52,69 

Cincinnati,   Ohio 34,  35,  203 

Citrus    Growers 6 

City  Leagues 51 

"City  of  Homes" 85 

Clark,  H.  M 416 

Coal  Dealers,  As  Members 129 

Collateral    174flF 

Note    4fll 

Columbus,  Ohio 51 

Community,     Character     of,     for 

B.  &  L.  Ass'n^ 5 

Compound  Interest  Tables..  .291-321 
Congress    23,24,77,78,79,80 

Recognition   of  B,  &   L.  Ass'n 
by 25,76 


PAOB 

Congress    of    Building    Societies 

in    Kngland 47 

Connecticut    71 

Constitution  of  B.  &  L.  Ass'n — 

133  134,  151,  164,  175,  192,  194, 
220,  485-479 

Contingent    Fund 286 

Contracts  and  Agents 215fl 

Co-operation    1-8 

Co-operative   Bank 0 

Co-operative  Business  Concern...      3 

Conditions   of 5,6 

Examples    of 6,7 

Origin  of ..8,4,6 

Co-operative       Insurance       Com- 
panies         6 

Co-operative    Savings    and    Loan 

Ass'ns    14 

Copartnership 3 

Corcoran  Act 66 

Corning,  N.  Y 417ff 

Corporate   Meetings 188190flf 

Corporate  Seal,  The .    .    215 

Corporation   Stock 144 

Corporations   76,  248 

Corporators   163 

Costs 176 

County  Leagues 51,52 

Credit    42 

Cuyahoga    Leagrue   of   Cleveland, 
Ohio    52 

Dairymen    6 

Davis,  Henry  F.  A 68 

Dayton,  Ohio .  .    84 

Dayton    Plan,  The 84 

Decatur  Building  Association,  The  83 

Delaware   71 

Delinquents 98,  09,  161,  162ff,  176 

Denmark   5 

Depositor,   The 88 

Deposits 38,  43,  62,  85,  108,  151 

Envelope    411 

Certificates     151 

Slips    234,  409ff 

Special .120,  121 

DeKter's  Rule 878ff 

Directors — - 

88,   84,   137,   151,   162,   163,    167, 
173,  178,  209 

Duties  of 199ff 

Disability   Insurance 167 


[494] 


GENERAL  INDEX. 


Disbanded  Associations 156,  218 

Disbursements   237 

Dividends — 

17,  18.  40,  95,  147,  149,  165ff 
Calculation     of    on    permanent 

plan    322-370 

Declaring  314ff 

Payment  of 232.  233,  238,  275 

Dues.. 82.  87.   146,  147.176.234,405 

Earl   of   Selkirk 30,  32 

Elarnings.  Distribution  of — 

On  permanent  plan 322-370 

On  serial  plan 371-391 

Economic  Factor,  B.  &  L.  Ass'n 

as 35 

Election  of  Officers 192-194ff 

Elmira,  N.  Y 416 

Emergency  Revenue  Law,  The...   79 

Endlich,   Judge 38 

Endowment  Stock 108 

England   < 

Appraisers  in 179 

Congress  of  Building  Societies 

in    47 

Greenwich    29,  61 

Legislation    in 61,  Oi 

Representatives    from    at    (.'oii- 

gress  of  leagues 51 

Societies   in 29,  30 

English   Colonies 6 

English   Law 61,  82 

Criticised    62,  63 

Envelopes   for  Depositors 411 

Envelopes    for    Payments 233 

E>aminatons,  State 242ff 

Executor    169,170 

Exemption    68.  69-74 

Expert    128 

Families    41,  42 

Farm    Loans 122 

Farmers   6 

Federal  Excine  Tax  I-aw  of  1909.    78 
Federal     Reserve     Banking     Sys- 
tem    44,  46,  228 

Fees    117,  118 

Charter   81,  181 

Transfer   146 

Fines 29,  98,  99,  lOlfT,  176 

Fire  Insurance 280,  231 

Florida 6 


Forfeitures leiff,  175,  176,  332 

Forms   128,  149,  174 

Legal 392-404 

(Sec  Special  Index.) 
France 5,  30,  31,  71 

Representatives    from    at    Con- 
gress of  Leagues 51 

Frankford,   Pa 11 

Decatur  Building  Ass'n  of....    33 

First   Building  Ass'n   in   U.   S. 
at    31-33 

Oxford       Provident       Building 

Ass'n  of 11,  12,  13,  32,  33 

Fruit   Growers 6 

Furniture  Dealers  as  Members..  .129 

General    Meetings 188ff 

Georgia  34 

Germany    5,  31,  71 

Grand  Rapids,  Michigan 00 

Great    Britain 30,  47,  71 

Great  War,  The 228 

Greef   vs.    Equitable   Life   Insur- 
ance Co 11-* 

Greenwich,  England 29 

Greenwich  Union  Building  Society  61 
Guarantee   Stock 121,  122 

Halifax,  England 50 

Halifax,  Permanent  Building  So- 
ciety        00 

Hamilton  County  League  of  Ohio  62 

Haymaker,  K.   V 102 

Hill,   Enoch 00 

Headquarters    138,  139 

Health    Insurance 157 

lloboken,  N.  J 34 

Hotnic.1,  Clay  IF •♦lO 

Homrbuilder    i 42 

Homebuilding— 13,     19,    31.    36.    42, 

44,  96,  96,  07,  126,  164 
Home    Ownership.  .S.l,  42,  46,  64,  167 
Homes,  Number  Built  Yearly....    44 

Homes,    Rented 41,  42 

Homestead  Associations.  .  .    9 

llorraks,  J cretniah 11 

Housing    Problem 41 

How  to  Organize.  .  ,  .126-143 


lilinoifl    . 
Income   . 


.    07 
,  .   37 


[495  J 


GENERAL  INDEX. 


Incorporation   U4,  130,  137 

Articles  of ISa,  144 

Form  of  in  Ohio Wi(f 

Ix-gislation .68,  64 

Industry     8,  3,  128 

Industrial  Class 36 

Industrial  System 2 

Inheritance  Tax  Laws 168ff 

Insolvency   4 219 

Installments— 82.  83,  84,  02,  98,  116, 
119.  131 

Insurance    IT,  157-lf.» 

As  collateral 230ff 

Mortgage   Clause .399R 

Insurance    Companies,    Co-opera- 
tive        8 

Intcrest..l7,  20,  39,  M,  48,  61,  94,  176 
Calculation    of    on    permanent 

plan    322-370 

Compound  Tables 291-321 

Simple    888flF 

International  Congress  of  Co-op- 
erative Home  Societies 50 

International  League 49,  50 

Ireland 30 

Representatives    from    at    Con- 
gress of  Leagues 51 

Ireland,  Loan  Fund  of 62 

Italy    5 

Investments    38,  41,  46,  146,  168 

Investor 1*8 

Kansas 121,122 

Keck,  Dr.  Peter  A 84 

Kentucky    80 

Kircudbright,  Scotland 30 

Knox.  C.  C 180 

Koerncr,    Gustav 83 

Labor  and  Capital 2,  3 

Labor  Unions  as  Members 189 

Law  of  Building  Ass'ns,  The 33 

League    Meetings ;.   58 

League  Officers 57,  58 

Leagues,  Building  Ass'n 47,  58 

Associations   48 

County,  city  and  local 51,  52 

International    49-51 

Membership  in 55-58 

Organization  of 49 

Origin  of 48 

U.    S.    League    of    Local    and 

Loai\   Ass'ns 48 

Wliat  a  League  can  do 52-55 


FAOB 

Leaseholds    Stt 

Ledftcr    Cards SSSif 

I.eil5:er,  General      ...    .    276ff 

Lqdffcr,    Member.'    278ff 

Legal    Notices 817 

Legal    Proceedings 165 

Legislation 62,  55,  67 

Legislators   57,  58 

Legislature   58,  54 

And  incorporation 136 

And   Taxation 69-81 

Lending  Societies 13,  20 

Liabilities  and  Assets 277,278 

Liabilities  of  Building  Ass'ns. .  .214ff 

Liberty    Bonds 40 

Lien    150 

Mechanics    180flF,  402 

Life   Insurance 158 

r^iquidation  of  Debt 17S 

Litigation   17,  67,  68 

Loans— 20.  21,  36,  39.  43,  45,  61,  85, 
94.  154.  165.  166,  176ff. 
Advantages  of  building  ass'n..  .224 

Amortization 42,  123 

Application    for 176ff 

Cost   of. 222 

Long  time 43 

Nature  of 173 

Repayment  of 228ff 

(See  Special  Index) 

Local   Leagues 51,  58 

I^ndon,  England 50,  51 

Lumkin,  Judge 88 

Lumber  Dealers  as  Members.. .  .128 

McEwan,  of  New  York  Evening 

Post 416 

Management  of  Associations....   54 

Manager   199 

Manufacturer   36 

Massachusetts    84,  71 

Matured  Shares — 

88,  89,  90,  105,  153,  219 

Maturity 17,  32,  89,  99.  100,101 

Mechanics'   Liens 188 

Laws  of 184 

Meetin?:,   First  The 129,130 

Regular   142,  164 

Membership  Cards 142 

Membership— 

126,  152,  160.  161.  188,  248 

Recruiting   189 


[496] 


GENERAL  INDEX. 


PAGE 

Members.  Duties  and  Rights. .160-171 

Corporate   rights 164ff 

Duties  of 161 

Investor's  rights 165 

Kinds — savers  and  borrowers. .160ff 

Merchant   36 

Metropolitan     League      of      New 

York    52 

Michigan    50,  81 

Milwaukee,  Wis 3.0,  51 

Money 174 

Mortgage    Loan.. 20,  21,  42,  43.  44.  45 

Straight    184 

Mortgages— 17,  18,  20,  21,  62,  73.  74, 
149.  172,  173,  174 

Collateral    note 401 

Custody   of 228,229 

Forms  of.  in  Ohio 396ff 

Insurance  policy  forms 399f! 

Recording  of 228 

Mortgagors    232 

Rights  of 163ff 

Rights  of  borrowing 169ff 

Mutual,       Cooperative       Institu- 
tions    37,  64 

Mutual  Home  and  Savings  Ass'n 

of   Daytcn,   Ohio 34 

Mutual  Loan  Association 9 

Meetings,  General 189ff 

Mutuality    13,37 

Name,  Choice  of 130,  131 

National      Building      and      Loan 
Ass'n   118 

New   Hampshire 71 

New    Jersey 84,  51,  78,  243 

Legislation    78 

Newark,  N.  J 34,85 

New  York- 
Taxation   in 71 

New   York  City 34 

New  York   Evening  Post 410 

New  York,  Metropolitan   League 
of 52 

Newspapers  as  Means  of  Recruit- 
ing     140 

New   Zealand 31 

Norway — 

Representatives    from    at    Con- 
Krem  of   Leagues 51 

Notices,  Legal 217 


PACE 

O'Brien.   Thomas  W 31-83 

Ohio— 

34.  66,  67.  78,  117,  124,  161,  226 

Bonds  of  Officers 395 

Building  Association  League, 

48,  50,  180 

Canton    50 

Charter  fees  in 131 

Cincinnati    34,  52 

Cleveland   52 

Constitution  and  By-Laws. .435-479 

Corcoran  Act 66 

Form  of  incorporation 392ff 

Hamilton  County  League  of...   52 

Legislation    78 

Mortgage   fonns 396.397 

Ohio    convention     and     legisla- 
tion      66 

Permanent  plan  in 91,  92 

Plan,  The 84 

Russell   Act 67 

Teledo   48 

Waiver  of  Mechanics'  Lien..  .  .402 

Youngstown   66 

Ohio  Building  Association  League, 

48,  50 

Ohio  Plan,  The 34 

Officers    128,  165,  192,  194 

Bonds  of 206 

Bonds  of,  in  Ohio 396 

Election  and  powers  of..  .192-194(f 

Permanent    137,138 

Remuneration   of 208ff 

Reports  of 188,189 

Responsibility   of 207ff 

Temporary   128 

Oregon   * 

Organization,  Preliminary..  .128,  180 
Oxford    Provident    Building    As- 
sociation   11,32 

Pane,  Howard   Wurtz 38 

Paid  up  Stock  Ledger 288 

Panama    Exposition 61 

Paris,   France 50 

Partnership  Rule 878ff 

Pass  book — 

100.  143,  161.  235,  275,  406ff 
Payments— 20,  21,  22.  29.  32.  42.  43. 
61.  82.  92.  108.  106.  107.  122.  128. 
125.  147.  170.  184,  285 

Of  dividends 282.289 

Of  Shares 240.241 

1497) 


GENERAL  INDEX. 


Pennsylvania 59^  71 

Pennsylvania  Plan 80 

Periodicals   22-26 

Permanent  Plan,  The — 34.  61,  84-86, 
91,  98.  100,  101,  102  110,  lie, 
14S.  160,  238 

Calculation  under 322-370 

Compound  interest  of, 

295,  296.  297,  298-300 
Rebate  tables  under, 

294,  297,  298,  299 

Specimen  reports  of 290 

Permanent  Stock 121,  122 

Perpetual  Calendar — 

301,  302-304,  316-321 

Perpetual  Succession 214fT 

Philadelphia,  Pa.  .  .32,  33,  35,  83,  372 

City  of  Homes 35 

Philadelphia  Plan,   The 86,  91 

Pilling,    Samuel 11,  82 

Plat,   Necessity  of 178ff 

Polish  League  in  Chicago 52 

Powers  of  Building  Ass'ns 214ff 

Special    218 

Premiums — 

85,  115-117,  154,  159,  172,  176 
Pranard,  Dr.  Charles.. 30,  31,  50,  158 

President    igg 

Press,  The 58,  140 

Professional    Valuators    of    Real 

Estate 179 

Profits    40,  158,  165,  871,  391 

Application  of 323 

Methods  of  Calculation 372fJ 

Undivided    226 

Profit-sharing    2,  167 

Property,   Redeeming 169 

Property,  Stock  as 145 

Protective   Organizations 54,  55 

Proxy  on  Stock 394 

Publicity    46,  68 

Public  Meetings 128 

Rankin,  Lezvis  L 50  51 

Real   Estate 126,  172 

Appraisement  of 179ff 

Rebate    and    Compound    Interest 

Tables 291,  321 

Receipts   233 

Records    148 

Recruiting  Members 189,  140 

Reports   282-290 

Reserve  Fund 18,  118-116,  225 


rAoa 

Reserve  Fund  Stock X%% 

Rochester,  N.  Y ${ 

Rosenthal,  Henry  S 60 

Rotary  Club 130,  140 

Rulison,  Hiram  M.,  Jr 20» 

Running  Stock 92,  235,  236 

Rural    Credits 122,  128 

Rural    Dwellers g 

Rules Jig 

Russell  Act,  The 57 

Russia 5 

Salary  of  Directors 810 

San  Francisco,  Cal 61 

Savannah,  Ga 84 

Savings   88,  flfl,  163 

Saving  Members ICOff 

Savings  and  Loan  Associations..     9 

Savings  Associations 0 

Savings,    Small 40 

Savings  Societies 18,  14, 16 

Savings  Systematic 15,  86,  80 

Savings  Unlimited 18,  19 

Scandinavian    Countries 81 

Schalkross,   Isaac 11,  82 

Schmocle,  Dr.  William 33 

Scotland  30,  32 

Seal,  Corporate,  The 216 

Secretary   I96ff 

Assistant    197 

Salary   of 218 

Secretary's  Balance  Sheets 284 

Secretary's  Cash  Book 278,  405 

Secretary's  Contribution  Book, 

268-271flF 
Securities — 17,  80,  01,  150,  168,  174, 

176fr,  221,  228 
Serial  Plan,  The— 

86-91,  103,  148,  149,  163 

Calculation    under 372flf 

Distributions  of  earnings.  .871-891 

Specimen    report 285,  286 

Share  Contributions 266 

Shares— 19,29,  32,  01,  82,  83,  84,  87, 
88,  92,  98,  99,  100.  181,  144ff, 
152fT,  371ff 

And   houses 29 

Shipping 71 

Sidebotham,  Thomas 82 

Simple  Interest 388fl 

South  Africa 31 

Representatives    from   at    Con- 
gress of  League 61 


[498] 


GENERAL  INDEX. 


PAGE 

South  America 31 

South  Carolina 34 

State  Building  Associations 26 

State  Leagues — 

48,  52,  53,  55,  56,  57,  66 

Organization  of 49 

Spain    31 

Spanish-American   War 77 

St.  Louis 35 

Stamp  Act 77 

Stern,  Hon.  Julius 69 

Stock— 74,    81,    82,    85,    89,    144151, 

152  156,  160 

Paid-up   94.  95,  147 

Stockholders— 38,  73,  74,  89,  90,  103, 

104,  108,  120,  132,  144151,  163, 

169.  173 

Definition   of 152-156 

Special  Meetings 190 

Special  Powers 218 

Subscription    List 394 

SuiU 217ff 

Supervision  State 49,  185fT 

Supplies    128 

Systematic  Saving 15,  36,  39 

Tax    74,75,78 

Taxation  and  Legislation 59-81 

Taxation,   Exemption  from 68 

Taylor,  Dr.  Henry 11 

Tax,   Inheritance   Laws 16SfI 

Telephone    Companies,    Co-opera- 
tive          7 

Tenants    64 

Terminating  Plan— II.  33,  61,82-84, 
98,  102,  104,  145,  148,218 

Texas    6 

Thrift— 12,    14,    15,    32,    39,    41,    64, 
96,  129 

Toledo,  Ohio 48 

Tornado   Insurance 158 

Trade   Unions 140 

Troy,  N.  Y Sr. 

Transfer  of  Shares 175 

Transfer    Fee 140 

Treasurer 198 

Cash    book 273 

Truck  and  Market  G«rdener§. .  .  .      6 
Trustees,  Duties  of 200fiF 


United  States 178 

Early  history  of  building  asso- 
ciations  in 31,33 

First  building  association  in. .32,  33 
First   meeting   of   Building  As- 
sociation Leagues  in 48 

Laws  in 63,  64 

Representatives    from    at    Con- 
gress of  Leagues 51 

United    States    Commissioner    of 

Labor   26,27 

United  States  League — 

24.  49,  51.  52,  158 
United    States    League   of    Local 
Building   and    Loan    Associa- 
tions    48,  50,  60.  71,  76,  88 

United  States  Supreme  Court..71,  77 
Utica,  N.  Y 86 

Vice-President    196 

Votes    133,  164,  193 

Wage-earners — 

12,  20.  35.  36.  39,  40,  126 

Wages   37 

Wales  30 

Representatives    from    at    Con- 
gress of  Leagues 51 

War  Savings   Stamps 46 

War   Revenue  Act 80 

Washington 6,  122 

West    Vir.ginia 80 

H-'hitrly,  Thomas 60 

Pyhttlock,  Isaac 82 

Wisconsin    6,  60 

Withdrawal— 89,   108.   148.   161,   165, 
1C9,  175 

Right  of 16Cff 

Rules   110-112 

Value    1;'3 

Withdrawal    Book 100 

Workingmen    12,  20,  35,  36,  87 

World's  Fair  Congress  in  Chicago    48 
IVriijhl,  Carrol  D 20,  27,  165 


Y.  M.  C.  A 

Youiixstown,  Ohio. 


.140 
.    06 


14901 


SPECIAL  INDEX. 

FIGURES,  FORMS,  TABLES. 


PACE 

Articles  of  Incorporation,  Ohio..392flf 

Attorney's  Report 403 

Auditing.   Plan  of... 267 

Auditor's    Certificate 279 

Bond  of  Officers  in  Ohio 395 

Collateral     Note     for     Loan     on 

Passbook    402 

Compound  Interest  Tables.  .  .295-300 

Deposit  Envelopes  and  Slips.  .  .409flf 
Dexter's  Rule 379ff 

Earnings,  Calculation  of  by  Serial 
Plan    373flE 

Fundamental  Interest  Table 308fr 

Interest  Tables 324  346 

Interest  Tables,  Compound.  .295-300 
Interest  Tables  (six  months)  ...  .354 
Interest  Tables,  Simple 388ff 

Mortgage    Clause    for    Insurance 

Policies    399ff 

Mortgage      Collateral      Note     on 

Shares  of  Stock 401 

Mortgage  in  Ohio 396ff 


FACE 

Partnership  Rule 379ff 

Passbooks    406fiF 

Perpetual  Calendar 801,  316-821 

Proxy  on  Stock 894 

Rebate    and    Compound    Interest 
Tables    291-321 

Rebate,  Permanent  Plan 294 

Receipt   Forms 238,  234 

Reports- 
Attorney's   403 

Specimen    288,289 

Specimen  of  Permanent  Plan. ..290 
Specimen  of  Serial  Plan.  .285,  286 

Secretary's  Contribution  Book... 269 
Secretary's  Monthly  Contribution 

Book 278 

Shares.  Table  of 849-868 

Statistics  for  Year  1893 «7 

Statistics  for  Year  1919 28 

Subscription    List 394 

Time  Table  Summarized 348 

Waiver      of      Mechanic's      Lien 
(Ohio)    408 


[500] 


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